Everybody wants a solution to global warming, but too few want to pay the cost. But what if the cost could be fully rebated to the public? Well, it can. I think that the "fully rebated carbon tax" is likely to have the widest possible appeal as a means of reducing carbon emissions.
Now, many folks understand that a tax on carbon emissions has a lot of very nice features: it makes us all take global warming into account when we produce & consume energy, transportation and other goods. It appeals to a wide swath of "thoughtful" public opinion, because it avoids heavy-handed regulation. But even Al Gore has a tendency to whisper his support for it, because everybody hates taxes.
But what if the tax could be fully rebated?
Won't work? I'll show you how on the flip.
The idea is that we introduce a tax on all carbon-producing activities (no, not exhaling!), with the tax equal to our best estimate of the per-carbon-ton damage being done to the environment. The tax could be phased in slowly but surely.
The tax would:
- Automatically reward conservation (you pay less tax)
- Give economic incentives for "green" production techniques
- Reward innovations that increase, for example, energy efficiency
- Reward communities that design energy-efficient (e.g. mass-transit oriented) neighborhoods.
But, "read my lips, no new taxes."
The solution is to take the total tax revenue and divide it up equally among every American man, woman and child. If the average per-capita tax revenue is $1000 (I am making that number up), then at the beginning of the year you get a check in the mail from Uncle Sam for $1000 for every member of your family.
But doesn't that "updo" the tax? The average American family could still afford to consume the average amount of carbon -- and so what drives the average down? Well, if you consume less than average, you win -- you actually have money left over from your rebate check to pay for non-carbon producing goods. Of course, the plan allows you to consume more than average, but then you pay, and you pay on every extra little bit of carbon you produce, every extra mile you drive. Hmmm, that fuel efficient car is looking better and better!
So, what's the hitch? Well, folks may not believe in the rebate. It might therefore pay to start with a small tax and develop a reputation for really rebating the money. I would favor letting the Feds actually borrow the money to pay the first rebate in advance, so that ordinary folks don't face cash-flow problems.
Also, many companies will favor a "cap-and-trade" system whereby they get issued a certain number of carbon permits, which they can then possibly sell to offset the cost of new technology. The real question isn't really "cap-and-trade" versus "tax", but rather who gets the revenue from the plan -- consumers or firms? You could, for example, let the government auction off a set number of "carbon permits" and then rebate the resulting revenues to families.
There are all kinds of variations -- you could caculate the tax revenue and the rebate state-by-state so that no state loses on average from the plan (although you then don't have an incentive to move to a state offering a more energy-efficient lifestyle.) You can have a strict per-capita tax, or make the rebate a bit smaller for kids (since they don't drive separate cars, etc.) The basic idea still works with many variations.
But in the end, Repubs are going to favor "cap-and-trade" with the (hidden) revenue going to firms not families. The increased price of energy and other goods will be passed on to working families, who can ill-afford it. T
On the other hand, the fully-rebated tax is actually quite progessive -- rich folks will in practice pay more and get the same amount back. A poor, carless, bus-riding urban family would win big-time from this plan -- and why shouldn't they since they aren't the problem?
The fully-rebated carbon tax ought to be the Democratic plan.