Why the ‘conservative’ carbon tax is still a non-starter

By Bryan Cosby and Katie Tubb | The Daily Signal

It feels like beating a dead horse, but the “conservative” carbon tax proposal is still hanging around.

A number of conservative groups are so tired of the mislabeled carbon tax that they’re pushing Congress to take a nonbinding vote to help finally put the issue to rest. That vote — based on a nonbinding resolution introduced by Rep. Steve Scalise, R-La. — is scheduled for Tuesday in the House of Representatives “expressing the sense of Congress that a carbon tax would be detrimental to the United States economy.”

The proposed vote comes just after a new group, Americans for Carbon Dividends, is pitching a “conservative” carbon tax that would “put America in the driver’s seat of global climate policy.”

The plan developed last year by a group of notable conservatives like former Secretaries of State James Baker and George Shultz sets a gradually increasing tax on carbon dioxide emissions. To account for the inevitable increase in energy costs, the taxes would be redistributed to all Americans equally.

Ideally in their world, this would make carbon dioxide-heavy goods and activities more expensive, creating pressure to innovate or lose customers.

Because the tax would target energy, a basic building block of the economy, the plan tries to mitigate the hit to businesses with a border tax adjustment to prevent other countries from “free-riding” and help U.S. companies compete in countries that don’t tax carbon dioxide.

The final part of the plan calls for sweeping deregulation of what would be, when combined with the other parts of the plan, redundant climate regulation. This would include most or all of the Obama-era climate change regulations like the so-called Clean Power Plan.

The market-flavored approach of the Carbon Dividends Plan may seem like a great compromise to the creators. However, some fundamental flaws and unwelcome implications immediately become apparent. The plan lacks details precisely because those details would clearly reveal the negative implications of the plan’s implementation.

Levying a price on carbon dioxide will directly raise the cost of electricity, gasoline, diesel fuel, and home heating oil. The carbon tax itself would be regressive, affecting poor Americans who spend a larger share of their income on energy, over 80 percent of which in the U.S. comes from carbon-based resources.

Even assuming that Washington could keep its hands off a new revenue stream, the redistributed dividends would not remedy this problem either, as they would be equally distributed to all Americans, whether they’re Bill Gates or a low-income family struggling to pay their electricity bills.

Furthermore, a rebate check wouldn’t undo the economic damage caused by a carbon tax. Any carbon tax would weigh down on the economy. The direct impact on energy prices is just a part of the economic harm.

Energy is a necessary component for just about all of the goods and services consumed, so Americans would pay more for food, health care, education, clothes, cleaning supplies—you name it.

The real kicker is that if you take government models at their word, a carbon tax would have almost no impact on global temperatures. But with no specific global temperature reduction goal in mind, this particular carbon tax plan fails to have a clear purpose. So much for being in the driver’s seat.

Ironically, the U.S. has been on a sustained downward slide in carbon dioxide emissions without any carbon tax. Over the last four years (2014-2017), U.S. emissions of carbon dioxide have fallen; comparatively, Europe has increased emissions over the same four-year period. For nine of the last 18 years, the U.S. has led the world in carbon dioxide emissions reductions.

The carbon tax needs to be called out for what it really is: just another tax. A carbon tax would have massive implications on the American economy regardless of what the initial tax rate is set.

A centrally-planned taxation and wealth redistribution system is clearly not a good plan for Americans, let alone one sold as a truly conservative solution.

Image courtesy of Wikimedia Commons/Infrogmation

6 thoughts on “Why the ‘conservative’ carbon tax is still a non-starter

  1. Carbon Tax Impact On A Typical Vermont Family, as reported on VTDigger:

    – The carbon tax would impose a $10 per ton tax of carbon emitted in 2017, increasing to $100 per ton in 2027.
    – The carbon tax would generate about $100 million in state revenue in 2019 and about $520 million in 2027.
    – The carbon tax would be added to the fuel prices at gas stations and fuel oil/propane dealers. Drivers should expect a tax increase of 9-cent per gallon of gasoline in 2017, increasing to about 89 cents in 2027.
    – Homeowners, schools, hospitals, businesses, etc., should expect a tax increase of 58-cent tax per gallon of propane and $1.02 per gallon of heating oil and diesel fuel in 2027.
    – A typical household (two wage earners, two cars, in a free-standing house) would pay additional taxes in 2027 of about:
    – Some of the carbon tax extortion would be at the pump, some when the monthly fuel bills arrive, and some as higher prices of OTHER goods and services.

    Driving = $0.89/gal x 2 x 12000 miles/y x 1/(30 miles/gal) = $712/y
    Heating = $1.02/gal x 800 gal/y = $816/y
    Total carbon tax in 2027 = $1528/y
    Sales tax reduction 5/6 x 1400 = $233/y
    Net tax increase = $1295/y

    – The hypocritical sop of reducing the sales tax from 6 to 5 percent would save that household about $233 in sales taxes, for a net loss of $1295 in 2027. That means such households, the backbone of the Vermont economy, would have about $1300/y less to make ends meet.
    – Many of these households have had stagnant or declining, spendable real incomes (after taxes, fees, surcharges; other recurring expenses, etc.), plus dealing with a near-zero, real-growth Vermont economy, since 2000.
    – With less real income, and higher real prices for goods and services, they also would have to make their own energy efficiency improvements.

  2. “carbon dioxide-heavy goods” – Fermentation? Beer, wine, whiskey? Regressive! I’m against it!

  3. One must first believe that co2 is causing global warming. Before that, one must be led to believe that there is global warming. Any time we get warm weather (like summer time), Al Gore (the inventor of the internet) and crowd running around screaming “global warming, we’re all going to die”. Trees use CO2 to grow. We all exhale CO2. The proposed ‘carbon tax’ is just a great way to scare people, that don’t have a clue, to scream for a tax from the wealthy ‘industrialists’. Now that we have virtually no industry in VT, where and how are we going to pay for this boondoggle?
    Thinking here is out the window, it’s all emotional.

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