Smartly framed, a carbon tax has a fighting chance of success. And here’s how to frame it: Dedicate all the revenue, not just some, to cutting other taxes.
In case you’re wondering, why would a carbon tax be so much better than quantitative emissions controls like the ones just proposed by the U.S. Environmental Protection Agency? Because it allows the greatest possible flexibility in meeting any given target for lower emissions. Unlike caps on emissions from cars or power plants, say, or subsidies for this or that form of clean energy, a tax lets market forces organize the economy’s response. This ensures that emissions are cut where it’s easiest and cheapest to cut them.
To be fair, the EPA’s recent proposals follow this thinking as far as possible. The target of cutting power-plant emissions of carbon dioxide by 20 percent between 2005 and 2020, and 30 percent between 2005 and 2030, allows for a variety of approaches. Within a single sector of the economy — electric power — the aim is to mimic the advantages of a carbon tax. State and regional cap-and-trade systems, operating across the economy as a whole, move closer still to the carbon-tax model. But why struggle to mimic the desirable properties of a carbon tax, with all the complications this entails, if you can simply have a carbon tax?
The standard answer is politics. The EPA can regulate power-plant emissions without new legislation, whereas a carbon tax requires Congress to act. The need to build political support is a formidable obstacle but not an insuperable one.
Granted, some Republicans oppose a carbon tax merely because it recognizes climate change as a problem requiring action. There’s nothing one can do to persuade that group. Many more Republicans oppose a carbon tax — even one offset by tax cuts elsewhere — simply because it is a new tax. Among this latter group, at least, the argument can be recast: The idea is not so much to impose a new tax as it is to reduce government intervention in the economy.
Instead of listing all the fine things a carbon tax could buy — some tax cuts here, a bit of budget-deficit reduction there, and plenty left over for additional spending on infrastructure and other good things — advocates of such a tax should simply offer to give back all the revenue in the form of tax cuts elsewhere.
Of course, we need, ahem, certain individuals not to play politics with the planet. That seems to be a problem in New Hampshire:
[New Hampshire] Republicans are pointing to [Democratic Senator Jeanne] Shaheen’s vote for an amendment proposed by Rhode Island Sen. Sheldon Whitehouse, also a Democrat, last year that established a “deficit-neutral reserve fund relating to ensuring that all revenue from a fee on carbon pollution is returned to the American people.”
Whitehouse himself said on the U.S. Senate floor that the vote would allow for a price on carbon.
To be very clear: That amendment, which failed, didn’t actually put a tax on carbon. Whitehouse said later he believes a tax on carbon is “inevitable” and the amendment was aimed at making sure the money went back to the American people. FactCheck.org also wrote that an ad by Americans for Prosperity which accused another Democratic senator of voting for a carbon tax by backing the amendment was misleading.
Still, it’s fair for Republicans to question Shaheen’s stance on a carbon tax, especially given the commitment by billionaire Tom Steyer’s environmental super PAC to spend big money in New Hampshire on Shaheen’s behalf.
She has never and “does not” support a carbon tax, her staff said.
“Sen. Shaheen has never supported a carbon tax,” said her office spokesman, Shripal Shah. “She supports market-driven solutions like the Regional Greenhouse Gas Initiative (RGGI) which has made serious investments in the New Hampshire and New England’s energy future and resulted in lower pollution.”
RGGI is a mandatory, regional cap and trade program.
The New Hampshire Republican Party scoffed at this denial of support for a carbon tax, and noted that Shaheen voted against an amendment last year to block a carbon tax.
“It’s laughable for her to deny supporting a national energy tax when she voted to establish one and thwarted efforts to block one. It’s a desperate election year stunt designed to distract from her support for policies that will kill jobs and increase energy costs in New Hampshire,” party spokesman Lauren Zelt said in a statement.
Considering the fact that 90 percent of New Hampshire residents support efforts to slash carbon pollution, and considering the inherent economic and ecological merit of the idea, you’d figure that both Sen. Shaheen and her Republican colleague, Sen. Kelly Ayotte, would be strong advocates of a rebated carbon tax. (Obviously, it’s not a surprise that Shaheen’s likely Republican challenger, former Massachusetts Sen. Scott Brown, isn’t terribly interested in putting a price on carbon.)