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Has Ms. Applebaum noticed the recession?
by Philidor

We've recently heard many lectures that raising taxes, except maybe on the rich, and attempting to balance the budget are the worst possible measures in a recession. Are taxes on carbon different from taxes on anything else?

A carbon tax would affect everyone significantly, and require politicians to focus on an issue which doesn't matter to most people. The more effective the carbon tax, the more damage and the more complaints.

The current legislation in the Senate is intended to have no effect on the economy nor on carbon. The idea is to turn harsh and destructive with additional legislation after the economy has recovered, and not before. Ms. Applebaum was premature; she should wait until 2012, when there might be a working economy to destroy.

The disadvantage is that the scientific "consensus" will have decayed as ambiguities and failures of the models continue to accumulate relentlessly and more and more scientists courageously speak out against alarmism. Maybe Ms. Applebaum has a point: too much time and the politicians won't be stampeded.

The recession couldn't have come at a less convenient time.

Re: Has Ms. Applebaum noticed the recession?
by dmm
They could impose taxes on carbon emissions in a revenue-neutral way, by simultaneously raising the individual and dependent deductions on fed income taxes. People generating more emissions than average would then pay extra taxes, while those generating less than average would get a tax break. Powerful incentive.
Re: Has Ms. Applebaum noticed the recession?
by Philidor

So if carbon tax revenues are neutralized by higher individual and dependent reductions, then the tax won't provide revenue for other purposes like, say, health care. That's okay, but it's worth noticing.

Worse, though, you're making the assumption that people who make more money and so benefit less from the deductions willfully generate more emissions, and so should be penalized. That may not be true, in part because wealthy people have more discretion to reduce their emissions. The inescapable result is a redistribution of money from those with more to those with less, individual carbon use being unmeasured and so irrelevant. That redistribution is a separate policy debate.

And worst, by the time the money reaches the income tax refund, the damage of higher energy costs has been done. Every day, every item required or wanted will cost more. That's going to damage the economy even if a lower tax withholding or higher refund allows paying off of some accumulated debt.

As worthy as your goals might be, they're very likely to produce unintended (and intended) damage. The admitted intention of taxing carbon is to cause people to use less of it. And that means harming how people live and the economy which supplies what they use. A carbon tax is too ruthless for me.

Re: Has Ms. Applebaum noticed the recession?
by ItOnlyStandsToReason

Carbon taxes will make things cost more, but with lower withholding, people will have more income to pay for them.

True that such taxes will like impact poorer families more; the tax adjustments can be tuned to account for it. No, there is no perfect program - but even an imperfect program would be better than what we have.

These hidden subsidies distort market prices, leading to less optimal investments, lower efficiency, and lower growth. A carbon tax would be better for the economy in the medium to long run, and it could be phased in over time to prevent short-term damage from shocks.


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