June 17, 2014

TAX WHAT YOU DON'T WANT, NOT WHAT YOU DO:

How to Sell a Carbon Tax (The Editors, 6/15/14, Bloomberg View)

The best way to reduce emissions of greenhouse gases is to put a tax on carbon. Almost all economists would agree. [...]

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. [...]

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.
Posted by at June 17, 2014 2:12 PM
  
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