Thank you for linking economic recovery and carbon tax.
Suggestion: Rather than increase the carbon tax annually based on inflation, increase it by $10/ton per year for 5 years. Then evaluate whether the tax is having the desired effect of reducing ghg emissions and adjust it accordingly. Ratcheting up the tax will level the playing field for new energy technologies, leading to rapid growth in this economic sector.
Also, change the name of the bill to The Job Creation and Carbon Reduction Act
An earlier commenter pointed out that the revenue from the carbon tax will, hopefully, decrease over time as we begin emitting less CO2. To deal with that problem, I recommend that the bill contain a provision that, when carbon tax revenue begins to decrease, Congress consider levying taxes against other environmental pollutants/problems with the goal of keeping payroll taxes low (or abolishing them). Let's tax what we don't like (pollution), not what we like (work)!
This is an initiative who's time has come. I first heard about it reading "Natural Capitalism" and it made complete sense. Only a hit like this will force environmental reform because they stand to reap a huge windfall by eliminating carbon.
My advice #1) Eliminate completely all payroll tax and roll it into the carbon tax and free the working class from subsidizing the wealthy.
My advice #2) Read "Natural Capitalism" for a ton of other ideas.
I think the idea is good. A variation might be, instead of reducing payroll taxes, to reduce taxes on green energy sources like wind and solar. That is, use the income from the carbon tax to reduce the tax on renewable energy sources, giving them a tax holiday. This would not only be revenue neutral, it would be energy tax neutral, so it would have less effect on energy prices. It would be fairer to energy users (keeping energy prices the same) and stimulate green energy directly.
This is a critically important bill. I was very involved when a similar attempt that tried and failed in Canada last year. Two lessons learned:
1. Know in impact of the bill on CO2 emissions- One of the most effective (false) allegations from critics in Canada was that there is no guarantee this effort will reduce CO2 emissions. It will, and there are ways of estimating it. Commission a reputable study to estimate these impacts
2. Initial year carbon tax should be smaller, say $6/ton, and ramp up linearly for the first few years. In Canada, opponents alleged this "tax on everything" would cause a price spike for the average family(despite the fact it was revenue neutral) . $6/ton should roughly translate to less that $100/year or 25 c/day for the average person - far less if you are are just starting with fossil fuels - not a huge price spike fear mongers will lie about. Make this point clear before they do.
I second your idea for additional "local" modifiers such as reduced property taxes, but I think that if implemented, these modifiers should be re-evaluated and probably reduced over time.
1/2: I join previous commenters in welcoming debate and progress on this issue!
@mattpross: Though the tons of carbon emissions will hopefully decrease, the tax per ton will go up. It all depends on how quickly emissions are mitigated. The tax rate per ton could be re-evaluated periodically (every 3 years) to compensate for tax revenue shortfall/surplus.
If the goal of the tax is to reduce gas consumption, the revenues will decrease over time (if successful). However, the tax is permanent.
So a permanent tax cut with a temporary revenue. Probably the only way to do it politically but better used to offset the hole we have for SS and medicare (until they can fix that too).
2/2: However, it's a legitimate concern, especially because the population on fixed incomes generally spends a disproportionate amount on energy costs.
1/2: Retirees on inflation-adjusted fixed income (such as social security, most pensions) should be automatically compensated to some extent. Even those whose income is not inflation-adjusted shouldn't be badly hurt by general inflation because, presumably, effects of increased energy prices will be factored into monetary policy. Furthermore, increased energy prices should be (at least partially) offset by the reduced taxes for companies whose inputs are mostly exempt from the carbon taxation.
Admittedly, my pension plan (Federal CSRS) currently provides for annual cost-of-living adjustments. (This just occurred to me.) But what about retirees on fixed incomes?
I have a concern: revenue neutrality is all well and good, but what about equity? Cutting payroll tax would do nothing for people living on retirement pensions -- as I hope to be very soon, having worked fulltime for nearly 40 years. Under the plan outlined in your video, pensioners would have to bear the burden of increased costs without any offsetting bump in net income.
This is far superior to the proposed cap and trade, as it is simpler, revenue neutral, and much easier for businesses to plan on costs (as you mention).
You should consider taking measures to ensure that revenue neutrality is "local". i.e. in states where coal is the primary source of electricity generation, this revenue should displace other sources of local revenue (e.g. property taxes). That would take away one of the biggest political obstacles.
2. We need not only charge people money for doing the wrong thing (dumping CO2 into the atmosphere) but also do our very most to support the new actors -- nascent climate technology goods and service providers. There should be some form of mechanism in the system that transfers money to investments in low-carbon RD&D.
Finally! I'm a student of economics at Harvard University and I have a few comments:
1. There is actually no evidence of the so-called Pollution Haven Hypothesis - i.e. that manufacturing industries move abroad because of pollution abatement costs. Any form of carbon import tariffs should therefore not be designed with this misconception in mind. While carbon import tariffs might be a good idea, they should be designed in collaboration with other large economies, including China and India.
As a strong democrat, I really like your suggestion. I am not one to always support tax cuts, as I believe we should be working towards a balanced budget. However, the suggestion you make is a perfect example of sacrificing some of the democratic values to create the type of bipartisan compromise that can be supported by a wide range of representatives. I am raelly glad to know there are repubs out there who take the carbon tax seriously.
Comment removed
ccljean 2 years ago
Thank you for linking economic recovery and carbon tax.
Suggestion: Rather than increase the carbon tax annually based on inflation, increase it by $10/ton per year for 5 years. Then evaluate whether the tax is having the desired effect of reducing ghg emissions and adjust it accordingly. Ratcheting up the tax will level the playing field for new energy technologies, leading to rapid growth in this economic sector.
Also, change the name of the bill to The Job Creation and Carbon Reduction Act
ccljean 2 years ago
An earlier commenter pointed out that the revenue from the carbon tax will, hopefully, decrease over time as we begin emitting less CO2. To deal with that problem, I recommend that the bill contain a provision that, when carbon tax revenue begins to decrease, Congress consider levying taxes against other environmental pollutants/problems with the goal of keeping payroll taxes low (or abolishing them). Let's tax what we don't like (pollution), not what we like (work)!
jhubermn 2 years ago
This is an initiative who's time has come. I first heard about it reading "Natural Capitalism" and it made complete sense. Only a hit like this will force environmental reform because they stand to reap a huge windfall by eliminating carbon.
My advice #1) Eliminate completely all payroll tax and roll it into the carbon tax and free the working class from subsidizing the wealthy.
My advice #2) Read "Natural Capitalism" for a ton of other ideas.
sandyssanders 2 years ago
I think the idea is good. A variation might be, instead of reducing payroll taxes, to reduce taxes on green energy sources like wind and solar. That is, use the income from the carbon tax to reduce the tax on renewable energy sources, giving them a tax holiday. This would not only be revenue neutral, it would be energy tax neutral, so it would have less effect on energy prices. It would be fairer to energy users (keeping energy prices the same) and stimulate green energy directly.
DCLeithauser 2 years ago
This is an excellent approach. I think that an increased gas tax should be thrown into the mix.
rbmjk 2 years ago
This is a critically important bill. I was very involved when a similar attempt that tried and failed in Canada last year. Two lessons learned:
1. Know in impact of the bill on CO2 emissions- One of the most effective (false) allegations from critics in Canada was that there is no guarantee this effort will reduce CO2 emissions. It will, and there are ways of estimating it. Commission a reputable study to estimate these impacts
uoftdrone 2 years ago
2. Initial year carbon tax should be smaller, say $6/ton, and ramp up linearly for the first few years. In Canada, opponents alleged this "tax on everything" would cause a price spike for the average family(despite the fact it was revenue neutral) . $6/ton should roughly translate to less that $100/year or 25 c/day for the average person - far less if you are are just starting with fossil fuels - not a huge price spike fear mongers will lie about. Make this point clear before they do.
uoftdrone 2 years ago
Three concerns:
1) Gradually phase in the taxes.
2) Businesses will kill this unless they receive back their proportional share of burden.
3) Use the absolute best empirical figures on optimal carbon taxation, and review them frequently after legislation is (hopefully) passed.
thanksbetotap 2 years ago
2/2: @thartwork1
I second your idea for additional "local" modifiers such as reduced property taxes, but I think that if implemented, these modifiers should be re-evaluated and probably reduced over time.
bjk214 2 years ago
1/2: I join previous commenters in welcoming debate and progress on this issue!
@mattpross: Though the tons of carbon emissions will hopefully decrease, the tax per ton will go up. It all depends on how quickly emissions are mitigated. The tax rate per ton could be re-evaluated periodically (every 3 years) to compensate for tax revenue shortfall/surplus.
bjk214 2 years ago
If the goal of the tax is to reduce gas consumption, the revenues will decrease over time (if successful). However, the tax is permanent.
So a permanent tax cut with a temporary revenue. Probably the only way to do it politically but better used to offset the hole we have for SS and medicare (until they can fix that too).
mattpross 2 years ago
2/2: However, it's a legitimate concern, especially because the population on fixed incomes generally spends a disproportionate amount on energy costs.
triplebrocorp 2 years ago
1/2: Retirees on inflation-adjusted fixed income (such as social security, most pensions) should be automatically compensated to some extent. Even those whose income is not inflation-adjusted shouldn't be badly hurt by general inflation because, presumably, effects of increased energy prices will be factored into monetary policy. Furthermore, increased energy prices should be (at least partially) offset by the reduced taxes for companies whose inputs are mostly exempt from the carbon taxation.
triplebrocorp 2 years ago
Admittedly, my pension plan (Federal CSRS) currently provides for annual cost-of-living adjustments. (This just occurred to me.) But what about retirees on fixed incomes?
wumhenry 2 years ago
First, thanks for asking!
I have a concern: revenue neutrality is all well and good, but what about equity? Cutting payroll tax would do nothing for people living on retirement pensions -- as I hope to be very soon, having worked fulltime for nearly 40 years. Under the plan outlined in your video, pensioners would have to bear the burden of increased costs without any offsetting bump in net income.
wumhenry 2 years ago
This is far superior to the proposed cap and trade, as it is simpler, revenue neutral, and much easier for businesses to plan on costs (as you mention).
You should consider taking measures to ensure that revenue neutrality is "local". i.e. in states where coal is the primary source of electricity generation, this revenue should displace other sources of local revenue (e.g. property taxes). That would take away one of the biggest political obstacles.
thartwork1 2 years ago
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2. We need not only charge people money for doing the wrong thing (dumping CO2 into the atmosphere) but also do our very most to support the new actors -- nascent climate technology goods and service providers. There should be some form of mechanism in the system that transfers money to investments in low-carbon RD&D.
GlobalF0CUS 2 years ago
Comment removed
GlobalF0CUS 2 years ago
Finally! I'm a student of economics at Harvard University and I have a few comments:
1. There is actually no evidence of the so-called Pollution Haven Hypothesis - i.e. that manufacturing industries move abroad because of pollution abatement costs. Any form of carbon import tariffs should therefore not be designed with this misconception in mind. While carbon import tariffs might be a good idea, they should be designed in collaboration with other large economies, including China and India.
GlobalF0CUS 2 years ago
Congressman Inglis--
As a strong democrat, I really like your suggestion. I am not one to always support tax cuts, as I believe we should be working towards a balanced budget. However, the suggestion you make is a perfect example of sacrificing some of the democratic values to create the type of bipartisan compromise that can be supported by a wide range of representatives. I am raelly glad to know there are repubs out there who take the carbon tax seriously.
ghettodude 2 years ago
It's nice to see some progress being made on this front.
dbindner 2 years ago
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Great idea! Lets hope the rest of Congress listens.
erikbrynjo 2 years ago
Comment removed
erikbrynjo 2 years ago