#30/ton carbon tax could reduce deficity by $1.2 trillion in 10 years

[eridani]

http://www.nationofchange.org/20-dollar-ton-carbon-tax-could-reduce-deficit-12-trillion-10-years-1349012360

Over the last year, there’s been increasing talk in Washington political circles — including conservative ones — about how to use a carbon tax as a deficit reduction tool. However, with an election season in full swing and a large number of Congressional Republicans campaigning against climate action, the current likelihood of getting a price on carbon is officially zero.

In theory, if Obama gets re-elected in November, there could be an opportunity to pass a carbon tax as part of a deficit reduction plan. With Bush-era tax cuts set to expire and Republicans talking a big fiscal game, Obama might have some leverage to play hardball with Congress and push for carbon pricing as part of a larger package.

It’s a long shot. But a new report from the Congressional Research Service released today illustrates why it’s such an enticing prospect. According to the CRS analysis, a modest carbon tax of $20 per ton that rises 5.6 percent annually could cut the projected 10-year deficit by 50 percent — from $2.3 trillion down to $1.1 trillion

[Tigress DEM]

1. Or it could reduce pollution by a lot! Win-Win

[Fumesucker]

2. Without some means of offsetting the costs a carbon tax is going to be horribly regressive.

In other words a carbon tax is going to fall most heavily on those least able to pay it.

Personally I'm not in favor of balancing the budget on the backs of the poor.

No doubt there is some means whereby a carbon tax can indeed be made non-regressive and indeed even progressive but just a straight carbon tax is going to hurt people already struggling to get by.

[eridani]

3. On industries, not on people n/t

[Fumesucker]

4. People buy the products of industries..

Industries pass costs on to their customers.

Even poor people do sometimes buy things, a carbon tax without offsets for those people will be regressive.

[ProgressiveProfessor]

5. Concur

It will be quite regressive

[eridani]

6. So what do you suggest for keeping our coastal areas from drowing? n/t

[Fumesucker]

7. You can't envision a carbon tax regime that doesn't burden the poor disproportionately?

The people driving the clunkers that get lousy gas mileage aren't the well to do, they are the poor, hybrid cars are beyond their financial reach.

The ones whose home is not well insulated and has ill fitting doors and windows that make it expensive to heat and cool aren't the wealthy, they are those in the cheap seats.

Becoming efficient takes up front investment, crude and inexpensive systems are inefficient for the most part, sophistication costs money to implement.

[eridani]

8. Gasoline prices are far more linked to what speculators are doing than

--they would be to a carbon tax. I was able to shut down gripes about a WA State 3 cent gas tax increase by circulating pictures of two Shell gas stations, one of which had a price 4 cents lower than the other. Want to save even more thatn the gas tax? Just drive another 6 blocks, dummy! I'm sure all the low income people noticed and took advantage of that difference.

[Fumesucker]

9. So you're saying a carbon tax is not regressive?

A billionaire will pay the same or a higher percentage of their income toward the carbon tax than the person making minimum wage?

Also I thought one of the purposes of a carbon tax is to encourage conservation, cut down on fossil fuel use? If the impact of a carbon tax is negligible on costs then there will be no reason for people to become more efficient.

[eridani]

11. See post #10--said it better than I did

Not sure what percentage of income has to do with anything--lower income people pay far higher percentages of their income for food and any necessity. A carbon tax would have a much larger effect on discretionary spending.

[Fumesucker]

12. Even #10 admitted up front a carbon tax would be regressive..

Also I see no obvious reason discretionary spending would be more effected by a carbon tax.

Percentage of income going toward taxes is how one determines if a given tax is regressive or not, a great many taxes in the USA are already strongly regressive, we really don't need more taxes in that category.

ETA: Not to mention a "revenue neutral" carbon tax will not have the effect you touted in the title of your OP of raising cash to help the deficit.

[pscot]

14. What is your understanding

of the problems we're facing as a result of climate change? Do you really believe that it's not going to affect the poor? What do you think are the chances of a world food crisis in the next 5 to 10 years? We're all going to be burned. The longer we delay mitigation, the worse it will be.

[Fumesucker]

15. I was just pointing out flaws and inconsistencies..

I have grandkids, obviously I'm in favor of the best possible world for their future, one that doesn't include them cooking in their own juices hopefully. I figure they have about a one in one hundred chance at most of ending up part of the 1% so I want what's best for the 99% and that doesn't include having climate change amelioration done on their impoverished backs rather than the overstuffed wallets of the 1%.

Come up with a way to do a carbon tax that really and truly is progressive and it's more likely to get support from the left.

Maybe every single individual gets a carbon allowance each year, go over your allowance for the year and it costs you points on your taxes, under and you get a portion of your savings as a refund.

The problem I see is that it takes a lot of record keeping to do something like that, it's not a thing that's easy or natural for a lot of poor people who will be forced to deal with paper records if they are not somehow digitally connected.

[wtmusic]

20. There is a way that's not regressive at all, and takes little record-keeping.

Fee-and-dividend.

Not a carbon tax, but an "environmental stewardship fee".

Simple. Low-income households, those who are frugal with carbon usage, and the environment reap benefits. Others pay for them.

[caraher]

10. James Hansen proposed a "revenue-neutral" carbon tax

Last edited Fri Oct 5, 2012, 11:49 AM - Edit history (1)

While I'd agree that even this would be somewhat regressive precisely because the poor generally drive clunkers and don't have the money to invest in efficiency and energy conservation measures, the proposal does have the virtue of avoiding perverse incentives in the tax code to maintain carbon emissions at some minimum level.

Coupled with targeted measures to help the less wealthy become more energy efficient and a sufficiently high tax rate, a carbon tax could be helpful.

[wtmusic]

21. Under Hansen's plan the poor stand to benefit disproportionately.

Think "environmental redistribution".

It's genius.

[caraher]

25. And the best part?

I actually learned of Hansen's proposal via a conservative's endorsement of the scheme! Libertarian law professor Jonathan Adler says,

Third, I believe the United States should adopt a revenue-neutral carbon tax, much like that suggested by NASA's James Hansen. Specifically, the federal government should impose a price on carbon that is fully rebated to taxpayers on a per capita basis. This would, in effect, shift the incidence of federal taxes away from income and labor and onto energy consumption and offset some of the potential regressivity of a carbon tax. For conservatives who have long supported shifting from an income tax to a sales or consumption tax, and oppose increasing the federal tax burden, this should be a no brainer. If fully rebated, there is no need to worry about whether the government will put the resulting revenues to good use, but the tax would provide a significant incentive to reduce carbon energy use. Further, a carbon tax would be more transparent and less vulnerable to rent-seeking and special interest mischief than equivalent cap-and-trade schemes and would also be easier to account for within the global trading system. All this means a revenue-neutral carbon tax could be easier to enact than cap-and-trade. And as for a broader theoretical justification, if the global atmosphere is a global commons owned by us all, why should not those who use this commons to dispose of their carbon emissions pay a user fee to compensate those who are affected.

I guess what's important to him is mainly that the government not grow...

[GliderGuider]

13. It sounds like this would be purely a money grab.

I thought the point of carbon taxes was to attack CO2 emissions. What happened to that? That goal isn't mentioned once. This proposal is unmitigated bullshit.

[eridani]

16. Why do you say it doesn't attack carbon emissions?

"Money grab" is what conservatives call all taxes.

[OnlinePoker]

17. Because if it's not done right, it does nothing to attack carbon emissions.

In BC, we now have a $30 per ton carbon tax that was gradually brought up to that amount since it was introduced in 2008. There were no provisions in the original legislation to help people modify their homes or vehicles to use less fuel. In this year's provincial budget, it says natural gas usage has gone up and gasoline usage has remained the same since 2008. I think one of the reasons for this is the amount of tax was minimal each year (an extra $6 per ton per year) and they offset the increase with lower taxes (making it "revenue neutral&quot . People didn't have any extra money coming in so if they didn't have money to modify their homes or cars before, they wouldn't have it after. Also, the majority of the tax breaks went to businesses both big and small. If the government thought they would pass the savings onto consumers, they were dreaming. All the money from the tax ($900+ million in 2012) goes into general provincial revenues so any programs to mitigate carbon emissions would fall on the consumers to come up with the cash to do their own renovations.

[wtmusic]

19. BC tried to implement a complex version of fee-and-dividend - and blew it

The whole point of fee and dividend is to divide collected revenues equally - meaning low-income families stand to reap a bonanza, whether they avoid carbon or not. The amount that they use is comparatively small.

[GliderGuider]

18. Two reasons

First, the article never mentions emission reduction as a goal, just deficit reduction.
Second, $20/tonne isn't enough to modify consumer behaviour enough to matter.

I'm not even sure what rate they're actually talking about here, because the article seems to indicate a tax of $20 per million tonnes of CO2 ($20/mtCO2 is the figure quoted).

[Fumesucker]

22. That's probably metric ton.

Sometimes abbreviated as mt.

http://en.wikipedia.org/wiki/Tonne

[GliderGuider]

23. Thanks.

Still not enough. I would support a $300/tonne fee-and-dividend tax, but $20 is just weaseling for spare change.

[Fumesucker]

24. It starts low and increments each year evidently.

I looked at the FAQ posted on the wiki page.

After a decade the fee and dividend would be substantial, not $300 but not $20 either.

[eridani]

26. There may be better ways to do it, but reducing carbon emissions--

--should help lower the deficit, which would be a helpful byproduct.