Could a carbon tax fix the deficit and the environment?
“Most carbon tax proposals envision an initial tax rate of $15 per ton of carbon dioxide. The carbon tax is meant not to raise revenue but to change behavior: The ultimate goal is to have polluters avoid paying the tax by shifting to renewables. Nonetheless, Tufts economist Gilbert Metcalf, in a 2007 paper, calculated that a $15 carbon tax would raise about $82.5 billion per year, which would easily cover the $70 billion cost of extending the payroll tax cut through 2013. To maintain pressure on polluters to keep reducing carbon emissions, the carbon tax would have to rise steadily. Inglis and Flake’s bill would raise it to $53 in its twentieth year, which is about what’s envisioned in a report by Robert Shapiro, Nam Pham, and Arun Malik of the private U.S. Climate Task Force. The task force calculated that the revenues could keep the Social Security tax a little below its current lowered rate and still leave 10 percent of the money to pay for other programs to fight climate change. Alternatively, you could use this money to provide even greater payroll tax relief for people at lower incomes.”
-Timothy Noah, “The Best Way to Fix the Deficit—and the Environment”
Photo courtesy of the New York Times