Friday, April 13, 2007

Carbon Taxes

Steve Chapman endorses the idea of a carbon tax to limit the amount of carbon dioxide being spewed into the atmosphere. And I agree. It would be the simplest, most effective way to limit energy use.

I have two caveats though. First, is he opposes CAFE standards. I disagree. I think they need to be raised (phased in) and made to apply to all automobiles, including "light" trucks which include pick-ups and SUVs. I agree that it only affects new cars purchased but as older cars are phased out due to age the ones they are replaced with will pollute less.

Second, he endorses offsetting the new carbon tax with reductions in other taxes:
Of course, no one wants to pay more in taxes. Here's the good news: We don't have to. Some economists propose that carbon tax revenues be used to finance equal cuts in income and payroll taxes. That way, we'd get environmental improvements and a lighter load on companies and workers. Meanwhile, the total tax burden on the economy would be unchanged.

Now, I'm not an economist, nor do I play one on TV, but I think there might be a flaw here. If the price of energy goes up but people are given more money from other sources the incentive to reduce energy consumption is less. There has to be some pain.

Plus, look at the deficits the government is running. We need some additional revenue. Why not get it in a way that makes everyone's life better?



Post a Comment

Subscribe to Post Comments [Atom]

<< Home