Four big problems with a carbon tax
In the movie The Secret Life of Pets, there's a part where two dogs are in dire straits, running away from a pack of angry dogs and lost in New York City's sewage pipes. One dog says to the other, "We've got a problem." The other responds: "We have so many problems. Which one do you mean at this moment?"
That's how I see things with a carbon tax, despite many economists insisting it's the best, simplest way to combat climate change. There's four big problems, as I explained at the Brookings Institution Tuesday:
- Most Republicans elected officials don't publicly say climate change is a problem in need of solutions. It's harder to tax something you don't acknowledge is something that needs to be reduced.
- Regardless of party, taxes are toxic. Hillary Clinton didn't support a carbon tax either. With universal GOP support and a handful of Democrats, the House approved a resolution in June 2016 to oppose a carbon tax. While symbolic, the vote nonetheless shows how politically toxic this remains.
- Where to draw the line preempting existing carbon regulations: where ExxonMobil draws that line is vastly different from where any environmental group ever would.
- How to spend the revenue raised: Lower other taxes? Give rebates to consumers? Put it toward clean-energy sources? Fossil fuel companies? It's a sticking point that helped lead to the downfall of a carbon tax ballot initiative in Washington state last year.
For now, the biggest problems in this Washington are the first two. When I ask Republican and conservative sources whether they'd prefer a carbon tax or a border tax as a way to raise money in tax reform, they don't have an answer. And I think ultimately the answer will be neither (for now).
Go deeper: Environmental think tank Resources for the Future just launched a handy carbon tax calculator. For example, a $40 carbon tax would increase gasoline prices on average by 36 cents.