Carbon Taxes

Via Plumer and Beaudrot along comes Chris Dodd with the first carbon tax proposal of the presidential campaign.

Every once in a while I wonder why you don't see a constant, dogmatic drumbeat of enthusiasm for carbon taxes from conservative pundits. You'd say, "we should have a carbon tax and offset it with reductions in income taxes" and split yuppie liberal types who worry about global warming from more traditional populist types. What's more, since to be effective a carbon tax would need to succeed in reducing carbon emissions you'd also set the federal government on a glide path to reduced revenues. It's great. But you almost never see people beating this drum.

I can imagine a few explanations. One is that most conservative pundits have allowed that portion of the brain that one uses to analyze a substantive question of national policy to atrophy to the extent that they don't understand why this is something that conservatives should like. Another is corruption; this proposal would be bad interest group politics and the energy companies are major financiers of the right. A third is hackishness; this proposal would put you in disagreement with George W. Bush and other Republican Party politicians. Last is the politics of resentment; conservative pundits just hate environmentalists too much to see the forest for the trees. Some combination of factors may be at work. And it's worth saying that several of your better conservative pundits -- Andrew Sullivan and David Brooks come to mind -- are on the bandwagon.

Comments

Every economist (as opposed to shills like Kudlow) will tell you that a carbon tax is hands down the best (i.e. most efficient) way to reduce fossil fuel consumption. This is why most other industrial democracies have something close, as evidenced by far higher gas and diesel fuel taxes. So naturally our pandering whore politicians will implement nothing of the sort...

Posted by: kafka on April 21, 2007 09:26 PM

Republicans reflectively oppose any tax increase, even one that is offset by other tax decreases. They can't help themselves.

Posted by: Joe Buck on April 21, 2007 09:31 PM

Kunstler, author "The Long Emergency"

"One thing that I'm predicting is that there will be a vigorous and futile defense of suburbia and all its entitlements, no matter what reality is telling us to do. And this will translate into a lot of political mischief. You can quote me: Americans will vote for cornpone Nazis before they will give up their entitlements to a McHouse and a McCar."

You can't attack energy use, even if offset by other tax cuts, without raising the marginal cost of the suburban life-style on which US conservatism (including of course many Democratic voters) is based.

Posted by: otto on April 21, 2007 09:48 PM

Andrew Sullivan hasn't been conservative in any meaningful use of the label for even longer than it's been since David Brooks has been "better" than that Krauthammer pack.

Posted by: aleks on April 21, 2007 09:53 PM

Not to blame Dems first or anything, but any Dem with an institutional memory is going to remember the drubbing Clinton took when he tried to pass the BTU tax. It just fits all too neatly into the GOP framing, alas.

Other than that though, I think Matt's also forgetting apathy and true evil, the two major cornerstones of the conservative "brain trust."

Posted by: ConspiratorialJew on April 21, 2007 09:58 PM

Re: You can't attack energy use, even if offset by other tax cuts, without raising the marginal cost of the suburban life-style on which US conservatism (including of course many Democratic voters) is based.

This is true, but not the sarcastic, elitist reasons folk like Kunstler suggest. Rather, the issue is that Middle America (including the non-suburban contingent thereof) is stressed to the limits financially (See: Elizabeth Warren's section here) and will not willingly accept anything that imposes any greater financial burden.

Posted by: JonF on April 21, 2007 09:59 PM

JonF: no link for that Warren article?

Posted by: otto on April 21, 2007 10:07 PM

AND it would a regressive tax, to boot.

Posted by: yoyo on April 21, 2007 10:16 PM

"Another is corruption; this proposal would be bad interest group politics ... A third is hackishness; this proposal would put..."

Hey, Harvard. You want colons there, not semicolons.

Posted by: Kyle on April 21, 2007 11:09 PM

the reason is more simple: cutting taxes is a position that has kept the right-wing together for years. no prominent Republican can get away with proposing a tax

Posted by: Jonathan Talamini on April 21, 2007 11:45 PM


Just a quick point that I thought you had missed. I think that many Republicans oppose carbon tax because liberals like it. If liberals like it, it must be bad . . .

Posted by: a non-imus coward on April 22, 2007 12:20 AM

Well, for a carbon tax to really be utility-maximizing, the tax revenues should be earmarked especially for those folks who suffer the cost of pollution. That is, disproportionately, poor people. (Smoggy bus terminals, etc.) So if it were implemented in the best possible way, it may or may not be totally regressive.

Of course, I'm sure a carbon tax would in actuality just go into general government coffers, and get spit back out according to the government's general expenditure-distribution scheme. Which, frankly, I don't know if it's progressive or regressive.

Posted by: mk on April 22, 2007 12:23 AM

Some combination of factors may be at work. And it's worth saying that several of your better conservative pundits -- Andrew Sullivan and David Brooks come to mind -- are on the bandwagon.

Well, I think it's simply a function of the fact that national discourse about policy has been dumb downed to utterly absurd levels. Any talk about new taxes will get the person proposing the idea branded a raiser of taxes -- even if the proposal explicitly calls for reducing other taxes to make the proposal revenue neutral. I don't think any country at any time has ever enjoyed a surfeit of political courage. But the shortage of it currently being suffered by the United States positively takes one's breath away.

Posted by: Jasper on April 22, 2007 12:31 AM

"I can imagine a few explanations"

Obviously not.

How about this, Matthew: "cost/benefit"?

You knew that of course, but you deliberately chose to avoid it. In a posting which accuses others of "hackishness", indeed.

Posted by: a on April 22, 2007 12:52 AM

The commenters above don't seem to be getting the idea of a carbon tax *offset with cuts in other (e.g. income) taxes*. A carbon tax doesn't have to represent an increase in overall taxes at all. It doesn't even have to be regressive -- you can offset it with cuts in taxes (such as SS payroll taxes) that hit lower income groups harder. The question of *what* we tax can be completely separated from the questions of *how much* and *who* we tax.

Posted by: MQ on April 22, 2007 03:17 AM

Overdetermined.

Posted by: Tyler Cowen on April 22, 2007 06:49 AM

What's so hard to understand? For conservatives, "tax increases bad" is an essential part of their propaganda and worldview. You only have to consider that they are in an outrage about letting Bush's tax cuts expire as the "biggest tax increase in history" to see that they are still 100% in the grip of supply side tax hysteria.

And since "global warming is a lie/is good for us" is another key belief, don't hold your breath waiting for conservatives to jump on the carbon tax bandwagon.

Posted by: Ron on April 22, 2007 07:34 AM

Dodd's proposal is flakey in itself (taxing companies only) but there are indeed "conservatives" who have been banging this drum consistently. Not that anyone knows or cares who I am but I've argued for doubling the Federal gas tax for a decade now.
Someone you might have heard of arguing the same thing more recently is Greg Mankiw.
Yes, make it revenue neutral, perhaps reducing FICA or raising the tax free allowance.

Posted by: Tim Worstall on April 22, 2007 08:30 AM

There is a broader point here which is that the US political system is incapable of making big package deals which combine two significant adjustments.

Posted by: otto on April 22, 2007 08:38 AM

What's more, since to be effective a carbon tax would need to succeed in reducing carbon emissions you'd also set the federal government on a glide path to reduced revenues. It's great.

I think the neo-liberal boomlet for a carbon tax is a little mystifying for this very reason (I assume you're not personally endorsing the glide path). The phrase Carbon Tax is not a proposal, in and of itself. The political likelihood of getting a carbon tax that is high enough to effectively reduce carbon, has mechanism to offset the tax and its regressive nature, and provides for a steady stream of revenue seems extremely remote. Each aspect is an invitation to special interest and conservative mischief.

The marginal economic differences between cap and trade and carbon taxes are more than offset, I believe, by the practical political problems of the latter. Especially since Cap and Trade gives us more predictable reductions in carbon, and the clock is ticking.

Posted by: AJ on April 22, 2007 09:10 AM

several of your better conservative pundits -- Andrew Sullivan

*snicker*

On topic, obviously another reason you don't see that many conservative pundits pushinga carbon tax - even offset by other tax increases - is that they don't think that reducing carbon use is a worthwhile goal!

I'm skeptical that anthropgenic global warming is occurring to such a degree that massive action is called for, but support carbon taxes for the reason that Glenn Reynolds does - we need to ween ourselves off of oil for political reasons.

Posted by: Al on April 22, 2007 09:54 AM

Al, you say you're skeptical about AGW. Why?

Posted by: Jeffrey Davis on April 22, 2007 10:07 AM

I'm skeptical that anthropgenic global warming is occurring to such a degree that massive action is called for

But aren't you still MORE skeptical that inequality requires a redistribution of wealth?

Posted by: Consumatopia on April 22, 2007 10:24 AM

Yglesias you mighty idiot. The reason that absolutely no-one of any importance is currently advocating this is because, unlike your waddling blubbery mound of cholesterol ass, they understand politics. They realise that although people may say they care about climate change when asked by a pollster when it comes to paying up they arent going to go for it. Proposing a carbon tax, the kind of carbon tax that would actually seriously discourage consumption, is a sure fire failure.

Posted by: pimp hand strikes! on April 22, 2007 02:27 PM

I favor a new uniform carbon-content tax but only by the federal government.

The first problem is that any new tax is automatically opposed by some. And it raises revenue which others will insist be earmarked for their favorite schemes.

And a third group will demand the tax be revenue neutral - the money must be given to someone. This group will certain not want it given as an income tax reduction; the truly poor pay almost no income tax.

It also is not practical to distribute it per capita. We have perhaps 30 million illegal aliens and/or gray economy workers who have no documents or false documents. They don't wish to be known or located.

Distributing it to the state government based upon census population is about the best scheme I can visualize. Is that fair? Not at all.

Otto pointed out that the Carbon Tax with revenue neutrality requires two significant adjustments in policy and probably is politically impossible for that reason.

Posted by: K on April 22, 2007 04:56 PM

Al, you say you're skeptical about AGW. Why?

I'm skeptical about the degree of AGW (in proportion to natural GW), not whether it is occurring at all. I don't think we have a very good handle on what causes natural global warming and cooling - i.e., what caused the midieval warm period or the little ice age - and thus am skpetical that we can really tell whether the warming we see to day is primarily human-caused or natural. When they come out with a research that tells me why it was warmer in the midieval warm period and why the same isn't occurring today, maybe I'll have more trust in the research.

I'm also skeptical about the costs of AGW (in relation to the benefits). And finally I'm also skeptical about the policies that are supposed to combat AGW - Kyoto will do virtually nothing, for example.

Posted by: Al on April 23, 2007 10:47 AM

This point has already been made, but I think it's worth reiterating. Because it's a tax. Simple as that.

Posted by: Gus on April 23, 2007 11:20 AM

Some taxes are more visible than others, as politicians are well aware.

Increased carbon taxes, even offset by income tax reductions, would be hugely unpopular because gas station signs are a lot more visible than paychecks.

On the other hand, although mandating increased ethanol usage does virtually nothing to help the environment, it gives environmentalists the warm fuzzies, most people don't realize how much it costs them, and it sure is popular in Iowa.

Posted by: Penry on April 23, 2007 11:53 AM

Al- Well, to truly understand all the explanations behind the science of global warming would require a lot of work on your part. But you can start at www.realclimate.org if you're actually interested. The reason why it requires a lot of work is to seperate the work of actual scientists from hacks funded by oil companies. Otherwise, you can trust the actual experts. They have reached a consensus and that consensus is that not only are they confident the warming we are currently experiencing is caused by us, but they have estimates of the temperature increases (with upper and lower bounds) we'll see in the next century.

Posted by: mpowell on April 23, 2007 02:51 PM

Last is the politics of resentment; conservative pundits just hate environmentalists too much to see the forest for the trees

Last, but CERTAINLY not least. At least, I think its the primary reason by far. Its not surprising - the Conservative Movement is currently defined much more by what it opposes, rather than what it is for. Opposing anything "leftist" takes priority over advancing any erstwhile conservative principle.

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