Pro/Con: Would a tax on carbon emissions hurt the economy?

Yes: Taxing carbon imposes extra costs on practically everything Did you enjoy $3-a-gallon gasoline last summer? Some members of Congress have plans for a carbon tax that will get you even higher prices. By taxing the carbon content of fuels, the...

Yes: Taxing carbon imposes extra costs on practically everything

Did you enjoy $3-a-gallon gasoline last summer? Some members of Congress have plans for a carbon tax that will get you even higher prices.

By taxing the carbon content of fuels, they hope to steer Americans toward smaller cars, mass transit and city living -- and away from SUVs, highways and suburbs. This is an astonishingly bad idea, one that will harm the economy while hitting the poor the hardest. When you think about it, a tax on transportation is a tax on everything.

A key reason for our economic success is that Americans have access to a broad market for the things we need and the products we make. The logistics revolution of the past 20 years -- centered on innovations like "just in time" production -- reduced manufacturers' costs and contributes to our prosperity.

Because our food, clothes and the materials with which we build our homes are drawn from this national market, a tax on fuels is a tax on everything. Raising taxes on everything we buy is a quick way to sicken our economy.


Of course, if carbon-tax supporters were proposing a national tax on everything, they'd be laughed out of town as soon as they opened their mouths. Every can of food, every book and every piece of clothing that you buy that wasn't raised next to the store where it was sold will cost more with a carbon tax. The only difference from an explicit "tax on everything" is that a carbon tax would be hidden, embedded in the price of everything you bought.

There are three kinds of taxes: Progressive taxes, like our income tax's rising rates for higher incomes, take a larger proportional bite from the rich than from the poor. Flat taxes take the same proportion from everyone. Regressive taxes take a higher proportion from the income of the poor than of the rich. Tax experts debate the relative merits of flat and progressive taxes, but there is no case for regressive taxes.

A carbon tax would be regressive because poorer people spend a higher proportion of their incomes on energy-related products. On average, families making between $10,000 and $30,000 a year spend 10 percent of their income on energy while families making more than $50,000 spend 3 percent. Taxing the poor more than the rich is not just economically dumb, it's morally wrong.

And finally, Congress isn't smart enough to tax carbon. Carbon tax proponents argue that people buy less of things that cost more. If carbon emissions harm the environment, tax enthusiasts reason that they can get people to emit less carbon by raising the price through a tax. Carbon-tax enthusiasts are vague about how much of a tax to impose. That detail matters a great deal.

How much harm does releasing the carbon in a gallon of gasoline cause? No one knows, and no one seriously believes an accurate assessment is possible. Set the tax too high and we'll use too little of carbon-based fuels; too low and we'll use too much.

We've tried allowing politicians to set energy prices before. The energy price controls of the 1970s produced long lines at gasoline stations, natural gas shortages, and Jimmy Carter in a cardigan. We can't afford any of those experiences again.

Carbon emissions may be bad for the environment. If they are, cutting carbon emissions is not something to be done on the backs of the poor through a regressive tax. Nor should it be done by sending the economy into a tailspin through a tax on everything.

ANDREW P. MORRISS is the H. Ross & Helen Workman professor of law at the University of Illinois College of Law.


No: Helping save the planet will spur economic growth

From No. 10 Downing Street in London to a U.N. conference in Nairobi to the Goddard Space Flight Center outside of the nation's capital, the science on global warming has been analyzed and the prognosis for planet Earth is not good.

The new Congress can help the United States and the Bush administration catch up with the rest of the world in stemming the damage that carbon emissions have done to our fragile atmosphere -- and supercharge the national economy as well.

Barbara Boxer, the incoming chairwoman of the Senate's Environmental and Public Works Committee, hails from a state that has largely adopted the greenhouse gas emission limits ratified by the Kyoto Protocol.

That treaty, of course, was roundly rejected by the Bush administration and ridiculed by Boxer's predecessor as chairman, the wildly anti-environmental James Inhofe, R-Okla., who persists on calling man-made global warming a hoax.

Boxer is correct when she recently stated that time is running out on global warming and that the federal government must initiate the same steps that states such as California have taken to curb carbon-dioxide emissions and provide incentives for alternate and environmentally safe energy sources.

Unfortunately, even the modest steps advocated by Boxer may not be enough to prevent Earth from changing into what Gus Speth, the dean of the Yale School of Forestry and Environmental Studies, foresees as a "ruined world" if something is not done quickly to repair the ecological damage already done.

More than 1,000 scientists who recently gathered at the Beijing Conference on Global Environment Change warned thatcarbon-dioxide emissions have increased four times faster than during the past decade -- an alarming development that calls for urgent and drastic action on the part of the world's "greatest carbon polluter," the United States.


Ironically, our country also ranks at the bottom of the list of countries named by Climate Action Network-Europe as doing the least about global warming -- 53rd out of 56 among industrialized nations. Only China, Malaysia, and Saudi Arabia are rated worse.

The European Union, led by France, has responded responsibly to the threat to the planet's environmental health by adopting a carbon-emission tax, a move that should be copied by Congress.

The French government is imposing a 10 percent tax on coal and industrial and air transport polluters to pay for alternative energy programs. The French may include a tax on imports of industrial goods on countries that refuse to adopt the Kyoto Protocol (read: the United States) greenhouse gas emission restrictions after 2012.

Congress should take action to impose a carbon tax on the major polluters: the oil, gas and coal industries; electric utilities; and the manufacturers of gas-guzzling cars, SUVs and pickup trucks.

The new Democratic leadership also should ensure that the new carbon tax is not passed on to consumers by mandating that price and rate controls limit the huge profits rolled up by the energy industry in recent years. Only a bite in profits will force Big Oil, Big Gas, Big Coal and Big Auto to change their ways.

A tax on carbon emissions may cause some economic suffering at first, but that pain will quickly abate as the new tax revenues pour into the Treasury to help subsidize job-producing ethanol filling stations, offshore wind farms, huge solar power complexes and other eco-friendly energy sources.

While Democrats have been timid about passing tax increases in the past, they should not shy away from this desperately needed levy even if they can't prevent it from being passed on to consumers. It is one that the environmentally concerned Americans who constitute the new majority will be happy to pay to save their beleaguered planet.

WAYNE MADSEN is a contributing writer for Online Journal.

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