Placeholder Post on Carbon Tax

From Climate Progress I read that “Senators Bernie Sanders (I-VT) and Barbara Boxer (D-CA) are expected to outline climate legislation on Thursday morning, which will include a tax on carbon emissions.”

“Under the legislation, a fee on carbon pollution emissions would fund historic investments in energy efficiency and sustainable energy technologies such as wind, solar, geothermal and biomass. The proposal also would provide rebates to consumers to offset any efforts by oil, coal or gas companies to raise prices.”

I agree with a carbon tax. However I strongly believe that it should be revenue neutral. Basically because it will not garner conservative support otherwise.

As the announcement does not indicate how high the proposed tax would be it’s hard to say more at this point. I hope to have more to say later.

I would just point out that revenue raising proposals in the United States pretty much have to get past a review committee of one:



32 responses to “Placeholder Post on Carbon Tax

  1. Tom,
    I find it interesting how people have turned Norquist into some sort of bogeyman. He is a player in the public square. He only has influence to the extent taht people agree with him. No one put him authority, nor does he have any. He is not a Soros, buying influence by way of front organizaitons. He is not like, say, Greenpeace operating > $billion a year to primarily by votes and influence. He is not like the Gates foundation buying influence by linking gifts to target orgs hiring specific people and implementing specific programs.
    He is just a guy who I frankly never heard of except as invoked by lefties.
    He seems to be a political Koch brother for ‘progressives’, iow a bogeyman.
    And bogeymen are notable by their lack of existance in reality.

    • I don’t consider Norquist a bogeyman. Washington has seen his like many times before. He’s a single issue power broker who has had a long and successful ride.

      I’m not sure he has been a force for good, but he has helped Republicans maintain discipline.

  2. Sorry Tom,

    If the only co-sponsor is Bernie Sanders then the legislation is DOA.

    This is called ‘fig leaf/show legislation’ to placate the Climate Concerned when Keystone gets approved.

    I would take note that our current Glorious Leader mentioned Lieberman in his SOTU address about climate legislation. Suffice to say that the ‘hard left’ drove Lieberman from office.

  3. The left, hard and soft, will be a big obstacle to a new regressive tax. Along with every Democrat in a coal or oil state or a district without a federally subsidized subway system.
    The left realizes a regressive tax doesn’t fit the narrative that you get all this “free” stuff and only “the rich” will pay. You can already see that in the language of the vague press release which takes pains to point out that they’ll hold everyone harmless if there are ” any efforts by oil, coal or gas companies to raise prices.”
    Well, yes, if you tax something the price of it will go up. That’s typically why you do the tax- make the price go up so people don’t use it as much.

  4. JeffN “That’s typically why you do the tax- make the price go up so people don’t use it as much.”

    Now if only we could get them to understand how the minimum wage and other employer costs effect the workforce. Regulation is a form of taxation we need more elected over site in all regulating bodies.

    • there are actually some good, conservative, arguments for a gas tax in particular- user fees, shift away from income tax, promote domestic production and improve security. That’s why I point out that the left is a bigger obstacle than Norquist – they hate regressive taxes no matter how much sense they make and, let’s face it, if everybody had to pay for that trillion-dollar annual deficit the “debate” over whether to hike taxes or cut spending would look a whoooooole lot different.

    • The last time I worked for minimum wage it was $1.65/hour. If I were to have the same buying power today, I would need $17/hour. Everything I’ve seen has unemployment going down when the minimum wage rises.
      Forget the models, look at the data.

      • Yes, and economists get really annoyed when they talk about this. How dare reality defy their theories! But it’s true and not only in this country. When you raise the minimum wage unemployment drops. I think the variable they’re forgetting to include in their equations is the attractiveness of being employed. It rises when the compensation does.

      • That rise is not due to companies wanting to hire more its due to people actually going back to work in positions that Need to be filed. Companies add less positions when the wage goes up but that does not mean that positions that were vacant and needed do not get filled.

        The matching SS and medicare payments on a higher wage are a tax on business and since tax brackets are determined by percentile rank of income the individuals feel no difference but the business is paying a lot more real dollars into those programs.

  5. A carbon tax is a tax on the poor. Unlike most taxes this tax will create more of what it taxes.

    • I don’t follow, MikeN. It could end up that way depending on how it’s structured, but there’s nothing inevitable about that outcome. If the tax is levied at point of production (utilities) rather than end-user then what could quite easily happen is the desired outcome of shifting fuel portfolio away from coal and towards other sources.

      • MikeN is right here. Taxes are always paid by the end-user, regardless of what point in the chain they are levied. A tax at production is no different from any other cost – just something to be recouped from the consumer.

        Ironically, this is the main reason that a libertarian like myself could accept a carbon tax – it’s user pay. However, it certainly would have a greater impact on the poor (who currently pay little/no tax) than the rich (who currently pay most taxes). I’m surprised a liberal democrat doesn’t see this.

        And let’s not get diverted by the ‘revenue neutral’ nonsense as espoused in BC and Australia. If we want to change carbon usage through taxation, it must be punitive to be effective. Otherwise we are going to be simply transferring a great deal of money through governments sticky fingers.

        Of course, I can’t really see it ever taking place. Elsewhere you’ve opined that it could work if the top five emitters were on board. I think that’s too low (<80% total hydrocarbon emissions), but even accepting that figure requires the US, China, Russia, the EU and India to all agree. I'm not sure that they'd all be willing to agree the sun rises in the east…

      • Hi kch,

        Well, first, China, India and the EU already agree, at least in principle.

        Second, being revenue neutral should not affect the utility of a carbon tax at all. It is meant to signal society’s desire to change fuels, not to bring in revenue. If a power generator can save enough money by converting from coal to natural gas because of the savings on carbon tax, we don’t care about the revenue. That’s why we just turn around it give it back as a cut in other taxes.

        As to its impact on the poor, it’s certainly working that way in the UK, so I agree we would have to be careful in its design. However, it is not inevitable that it impact the poor. They are more likely to get nickel and dimed by small taxes than hurt by large ones like income tax and might benefit more from a rebate from carbon taxes collected from the utility companies and distributed as lower social security taxes.

        Not saying it’s a slam dunk that it would work, but it could.

      • Thomas –

        Principle is one thing, but final acceptance will be another when China and India are faced with the actual bill. The EU will, I agree, slavishly follow anything that could expand the bureaucracy. At least the US and Russia are honest enough to recognize their probable final position.

        I think I would disagree almost entirely with your second point. If all a carbon tax is meant to do is signal a desire to change it’s going to fail to produce a change. Look at obesity – lots of signaling actions by society and government, yet we get fatter every year. If you want to effect change through taxation, it must be punitive. It’s at least partially working with smoking. Removing the punishment removes the incentive to change.

        Profit motive for switching by the producer is also a non-starter, at least here in Canada, and I assume in many other jurisdictions. Rates are set by public commissions, and you can rest assured that they would not be allowed to keep any fuel savings. Here in Nova Scotia that’s called a profit, and that’s a dirty word for our politicians.

        In much of the world, power generation and distribution is not a free market and so does not respond to free market incentive. Oil for transportation is something of a different matter, but is already highly taxed in most places. More on top of that? Please God, no thank you.

        Impact on the poor? Given the track record of governments on any large, complex legislation I don’t have any confidence that any government-derived system would work. You have more faith than I do, I guess.

        One last thought – national and sub-national inequities? Here in Canada more than 75% of our power comes from either hydro or nuclear (Sucks to be you, rest of the world! Now pay up and send us your jobs!). Unfortunately, in Nova Scotia we have no nuclear and little hydro (Now wait a minute, it wouldn’t be fair to collect our money to pay the rest of Canada’s bills! We want an exemption!) How does this get dealt with?

      • Hi Tom, your thesis on tax incidence only holds if the there is a high degree of competition that prevents the tax being passed through. Even in the case where we could conceive of a large number of competitors with quite different fuel portfolios, it is still profit maximising for say a non-fossil producer to price just below the fossil producer’s tax inclusive costs, which means the tax will be passed through.

        An alternative position that would yield what you hope is where regulation prevents the tax being passed through. But for this to have a fuel substitution effect, the tax must be set at least as high as the marginal cost difference between a taxed and non-taxed fuel source.

        I can point you to a real world example if the implementation of carbon trading where the carbon liability falls to the producer, but the cost falls to the consumer (or for example where the introduction of value added taxes is almost completely reflected in subsequent moves in the CPI). This yields two incentives, to the extent that the producer can reduce their total tax incidence, even though they are passing the cost through, they can improve their profits, plus if a consumer faces a shift in relative real costs there should be an incentive on them to change their consumption behaviour.

        The primary problem is that the consumer needs to have a substitute available or the consumer will either have to reduce consumption because they are at a budget constraint or reduce consumption of some other good or service and therefore face a reduction in overall welfare. This has already manifested as fuel poverty around the world. Even if a substitute is available they need to be able to fund the transactions costs associated with the change, and the saving may not put them back in the same position.

        We also face the conflict between setting the tax at a level equal to the cost of the externality, which may still result in a cost lower than an un-taxed alternative and the extreme view that people must change. This is a disconnect I often observe.

        I know your preference is a revenue neutral carbon tax, and I agree with you. Where we disagree is that I do not trust a/any government to implement such a tax.


  6. Hi Tom’
    Never, ever, ever, FEED the BEAST. The beast is far too big at the moment. Remember the old adage – The bigger the guvment, the smaller the citizen.

    • Hi Bob

      Umm, did I ever mention that I’m a progressive liberal Democrat who is an enthusiastic supporter of Barack Obama? (Honest, in other respects I’m quite sane…)

      • Tom, ” Umm, did I ever mention that I’m a progressive liberal Democrat who is an enthusiastic supporter of Barack Obama? (Honest, in other respects I’m quite sane…)”

        How do you explain your insanity here ( liberal) then. I don’t want to get into a 50 page discussion, but that is truly sick. Objectively you must realize that progressivism will not, and cannot work over time. Ultimately it is insidious, destroys creativity, and destroys what it means to be a free individual. In fact, given that progressives would vitiate an individuals innate rights, many argue it is even immoral. Another old adage, – the only problem with socialism is that sooner or later you run out of other peoples resources. Seek help Tom, and while you are at it make an appointment for Mosher.

      • Hiya Bob–like I keep saying it takes all kinds… 😉

        I would argue that many of the best things about the world today are the direct result of progressive liberalism. But this blog is about climate change, so we should find another forum for any knock-down, drag-outs we need to have.

      • Yes, see great examples of progressive liberalism as many would have it implemented here:

        Now defunct USSR
        N. Korea
        China before it embraced a capitalistic market strategy

        Now what is the single most different thing about the USA that would strike an independent observer with it being the wealthiest country on planet earth?

        Embracing of progressive liberalism? or
        Embracing of capitalistic markets?

        Capitalism has its warts, and there should always be a tug of war between progressive and conservative values, but pretending liberalism is what made America great is a bit of a stretch.

      • Tom, none of those ever had a hint of progressive liberalism about them. They were communist hellholes and progressive liberals fought against them as hard as anyone. Progressive liberals got us the GI Bill, Social Security, Medicare, the Civil Rights Act and a lot more. I’m proud to be a progressive liberal! And I don’t like the hard left at all–especially when they try and hide behind us.

        Kinda like some try and hide behind the Lukewarmer label–but that happens from both sides.

      • Tom, ” I would argue that many of the best things about the world today are the direct result of progressive liberalism. But this blog is about climate change, so we should find another forum for any knock-down, drag-outs we need to have.”

        Tom, it is nothing more than a sugar high, no protein. Being a progressive is easy, no discipline required. We shall wait for the appropriate venue. In the meantime seek some help so my task of converting you will be less arduous.

      • Many have tried, Bob–including some of your fellow commenters here.

  7. You can’t take these people seriously. This is just tossing a bone to the liberal base, Chance of passing = 0.

    “The proposal also would provide rebates to consumers to offset any efforts by oil, coal or gas companies to raise prices.”

    As if a company would have the gall to actually pass along tax increases to their customers! How dare they! Don’t they know this is simply a punitive measure to make them suffer for their sins? This is just another example of corporate greed.

    Their will never be an honest discussion of carbon taxes that includes a realistic assessment of how much someone’s monthly power bill will increase. This must be hidden and obfuscated. Ask Germany consumers how this has worked for them, +67% monthly bills.

  8. Tom, You recently ejected a commentor because he repeatedly used the term “denier” which you considered hate speech. I back you 100%.
    If you take a good look at some of the above comments, I think that they are equally offensive.
    I really don’t want to see this blog turn into another one of many skeptic blogs which are really just excuses to bash the left and environmentalists.
    I was hoping this blog would attract a mix.

    My next post will be a rant.

    • I’ll fight for my beliefs–I’m proud to be a progressive liberal. I’m happy conservatives and independents come here and that some support my (our?) position on climate change and policies. But I hope we’ll all remember that this isn’t a blog about politics.

  9. I am not fond of Boxer or Sanders, but their bill would not function as a regressive tax. They compensated for the tax being passed on to consumers by including a rebate. They also are taxing methane. Hooray!!!
    It also calls for complete disclosure of fracking and making frackers comply with the Safe Drinking Water Act. Double Hooray!!!!
    I really don’t like any of the climate bills, but this is the best one so far.

    • That’s actually quite encouraging–just the fact that they’re thinking about these things. Still wish it were revenue neutral, though. I want it to pass.

    • As the Spanish are learning, AGW is all about the money.
      Any ‘carbon tax’ will simply be used to sustain the pathological over spending fixation governments around the world are obsessed with.
      As to frakking and clean water- there are no instances on record demonstrating that frakking has violated the clean water act.
      As to disclosure, it is hilarious to watch the oil-illiterate buy into the idea that frakking is utilizing mysterious dangerous chemicals. The primary ingredient in frakking is sand. the next is baked bauxite, called “propant”. the next is water.
      Most anti-frakking people actually believe that mockumentary with burning water was telling some sort of truth.

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