October 20, 2015

Carbon Taxes: Where I Stand

Filed under: Politics — PolitiCalypso @ 6:03 pm

I complain a lot about the divergence of political ideologies toward their extreme points, and the accompanying (or causative?) increase in ideological “team” or “tribal” identification, but I’ll give this much to the people who do it:  It makes it easier for people to understand exactly where you stand.  One of the difficulties of staking out positions on a case-by-case basis (as opposed to accepting the entire package of an ideology) is that others may sometimes become confused as to exactly what views you support.  At worst, people may think that such a person is a crank who mindlessly rails against everything, when in fact the person is just thoughtful.

I grumble about environmental policy positions of the hard left.  This is not because that element of the hard left is the most offensive to me, but because the cause is—and always had been—the most important policy matter to me.  I care more about progress being made in it, and I’m a pragmatic idealist.  I happen to believe that pretty much any suggested regulation from these people that is aimed at private individuals would be counterproductive.  People tend not to like “the government” telling them what to do in their own homes, especially if it causes financial hardship or personal discomfort.

And the fact is that a lot of these ideas would do both.

I am in support of a corporate carbon tax.  Corporate taxes are already handled very differently than individual taxes, so the legal precedent exists to impose a carbon tax on business (large business, even, given that small businesses are often exempt from any manner of tax laws that apply to business) without doing it to individual households.  And if companies wanted to avoid the tax consequences of high carbon production, then their options would consist of carbon offset purchases (or donations to environmental causes, perhaps) instead of squirreling money into tax-free accounts.  I think it would be a net benefit to everyone.

I am not, however, in support of an individual carbon consumption tax.  In a time where the middle and working classes are already squeezed and unable to get ahead, this type of tax policy could impose an even greater burden.  Furthermore, it would be unequally applied and arguably regressive.  People who were fortunate enough to live in areas with public transportation, multifamily housing, and the like would have lower carbon usage than others.  Given that in urban areas, poor neighborhoods are usually underserved by public transit, and that the rural poor often have no options at all except personal vehicle ownership, the transportation part of the tax could very easily become highly regressive.  Furthermore, let’s look at those vehicles.  People who cannot afford a new, efficient car, or an upgrade to their existing one, would be penalized by a carbon tax as well.  One could even argue that people who eat meat, dairy, or buy leather would be penalized, as would people who lived in historic properties and did not have the money to insulate them.

People would also be penalized based on the climate of their location.  Those in highly temperate climates, such as the Pacific Northwest, would have lower home energy usage than those in the Northeast corridor (hot summers and cold winters), the Southeast (very hot summers), the Plains and Midwest (very hot summers and very cold winters), or, well, pretty much anywhere else.

And sure, a corporate carbon tax would penalize businesses in regions with extreme weather conditions more than it would penalize businesses elsewhere.  But unlike private individuals, businesses have more ability to pay for the upgrades to make their facilities more energy-efficient.  If such a carbon tax were to be implemented, it would even make sense to extend credits to businesses for making the upgrades, on top of the advantages that would be in place under the tax code once it took effect.

In sum, I don’t think an individual carbon tax is good liberal policy or politically pragmatic.  It could antagonize huge swaths of voters and possibly even open up a rift between the environmental community and the “economic justice” faction of the left.  However, I would favor a business carbon tax.  It would bring in extra revenue, give large companies fewer options for evading taxes, and result in lower industrial emissions from any sector subject to it.  Perhaps it would be ideal to reduce individual consumers’ carbon footprint too, but I think the best and most pragmatic way to do that is to encourage the production of greener products on the market, to offer tax credits (rather than imposing tax penalties) for green choices, and phase people into a new energy economy without slapping them with a regressive tax in an era of economic hardship.

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