In the area of fighting climate change, I must confess I hadn’t paid much attention to the idea of just a simple carbon tax. I assumed it was simply a tax on how much CO2 each person or corporate entity generates. It turns out that the revenues generated can be used to reinforce the point of the tax, as some top economists explain in WaPo:
The tax would add to the price of any good or service that uses carbon, especially fossil fuels. It means energy bills, gas and flying would cost more, at least at first. But the economists call for the government to return all the revenue raised from the tax directly to U.S. citizens, with a goal of effectively paying people to help address climate change.
“There is a substantial rebate. It’s estimated that if we were to start with something like a $40 a ton carbon tax that would amount to $2,000 per family, so it is a very substantial rebate,” said Yellen.
By giving every American a “rebate,” it encourages people to cut back on their own carbon usage because someone can make money if, for example, they receive a $2,000 rebate check and only spend $1,800 on carbon-intensive activities.
“The majority of American families, including the most vulnerable, will benefit financially by receiving more in ‘carbon dividends’ than they pay in increased energy prices,” the letter states.
It’s classic social engineering, but when it comes to a menace that is generally difficult for the common citizen to detect, it may be necessary, even if it raises my hackles. And I do appreciate the circularity of the tax, using both stick and carrot to begin reducing the amount of CO2 we generate.
If & when the Democrats take control of both Congress and the White House, it’ll be interesting to see if they adopt this idea as rapidly as possible. The implementation details appear to be quite daunting, so I hope that at least some work is taking place at the moment on how to deal with them.