TAX EXTERNALITIES:

Behind his great success, Shultz was a pragmatist; he knew how government and politics work. He knew that if conservatives don't have a climate solution that matches the scale of the threat, they will lose to progressives on politics, and the U.S. will lose on policy. His preferred approach, a carbon tax, would use market mechanisms favored by conservatives of the Friedman era to achieve the low-carbon economy promised by the left-which is also highly popular with the American public. 

Schultz argued that such a tax should be matched with dividends given back to American households, keeping government budgets from growing and reducing the net tax burden felt by most American families.

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