Interview with green tax swap guy

Very interesting

Posted by David Roberts at 7:49 AM on 17 Jul 2007

Read more about: climate | energy | carbon tax | John Dingell | politics

Here's an interview with Gilbert Metcalf, a Tufts University economics professor who's been circulating a carbon tax proposal (PDF) that's revenue neutral -- it uses the carbon tax revenue to reduce other taxes. It's called the "Green Tax Swap." Good stuff.

Here's one good bit :

SM: Rep. John Dingell said he plans to propose a carbon tax, knowing Congress and voters won't go for it. Why would your approach be different?

GM: Dingell's raising the old canard that Americans won't stand for a new energy tax. What the debate over the [Bill] Clinton BTU tax taught us was that Americans won't stand for an unfocused and poorly motivated tax with lots of loopholes for special interests.

I think the lesson from the BTU tax is that first you need to motivate the tax with a clear and simple rationale. The need to do something about global warming is no longer under debate in the U.S. and provides that rationale. Second, you need to create a package that is revenue neutral. My GETS proposal is both distributionally and revenue neutral. There's no reason Congress can't dedicate the carbon tax revenue to a special fund that is earmarked for income or payroll tax reductions.

Read the whole thing.

Here's Al Gore trying to sell it:

(thanks LL!)

For story: Interview with green tax swap guy
9 Comments | Post a Comment

yeah

I'd be for a carbon tax if it replaced income or property taxes, preferrably both.

by naturescene at 9:47 AM on 17 Jul 2007

Well thats the catch

Whatever tax your "remove" is still going to need to be paid for.

So unless you make the carbon tax higher than the previous tax, then there won't be enough money left to pay for dealing with climate stuff.

That said, this might merely be a solution to get around Jevon's paradox. i.e. Where it doesn't matter where the money goes, just so long as the commodity price goes up to prevent using too much "Fuel".

Jevon's paradox for instance, is that you open up more lanes on a freeway to reduce congestion. Only to find that more people take advantage of the freeway, and you once again have congestion.

In that same way. If oil suddenly became cheap on a per mile basis because our cars got 1000mpg. Then we would end up using more Oil than we did previously. Unless of course there was added incentive to conserve the fuel.

-David Ahlport

by GreyFlcn at 10:06 AM on 17 Jul 2007
[ Parent ]

The them-as-has-GETS tax, eh?

No comment.

--- G. R. L. Cowan, former hydrogen-energy fan
Oxygen expands around boron fire, car goes --
http://www.eagle.ca/~gcowan/boron_blast.html

by GRLCowan at 10:40 AM on 17 Jul 2007

I do not see tax relief in this

proposal. I would expect this tax to start out in the house sub-committee as revenue neutral, but end up to a real burden on the middle class. I have a very hard time seeing how this could be passed in congress.

by DogsCatsAndStrays at 11:59 AM on 17 Jul 2007
[ Parent ]

I like this idea

People who pollute less than the average amount of carbon will get money back, people that use more will pay more. Businesses will have incentives to use less carbon. Carbon-Free energy will become more competitive. Why set up a cap and trade system that can be manipulated (see Europe). Car efficiency standards are indirect and target only a subsection of our economy. With the tax, the incentives to buy fuel efficient cars will increase. I'm surprised that he forsaw such results with such a small change at the pump ($.13)

by ac5p at 1:03 PM on 17 Jul 2007

Well

Assuming it is merely to get around Jevon's paradox, this is actually a pretty worthwhile proposal.

Who this primarily hurts are people who don't get a majoriety of their money from payroll. (i.e. Stocks and Bonds)

-David Ahlport

by GreyFlcn at 1:06 PM on 17 Jul 2007
[ Parent ]

Ah yeah

And assuming they could get it passed

Racheting up the cost of carbon wouldn't be such a political football in the future

Since if everyone is minimizing their carbon output, that means that eventually whatever payroll tax does pay for now, the carbon tax will need to be increased to cover it.

-David Ahlport

by GreyFlcn at 1:09 PM on 17 Jul 2007

If global oil supply starts to decline...

...and gasoline prices go way up, revenues from the carbon tax will go way down, and lawmakers will be in the unenviable position of raising income taxes, so it sounds like a recipe for crippling the Federal government.

by Jon Rynn at 2:17 PM on 17 Jul 2007

So too with income taxes

Since wealth is, to a great degree, a measure of the availability of easy energy, when oil prices continue rising (in a volatile but generally upward trend) we're going to suffer serious recession and, ultimately, economic depression, as our economy struggles to transition to a much leaner, less energy available world --

So the fact that revenues from carbon taxes will go down when usage goes down is not a special weakness of carbon taxes.

In fact, the one thing you can say about carbon taxes (as opposed to income taxes) is that the certainty that people who have to use carbon fuels will not have many options other than to pay the tax is much stronger than the hope that there will be any great deal of profits or income to tax.

Indeed, to the extent we DO tax carbon and thereby propel people to shift away from carbon fuels, we not only promote a better environment but also a more economically resilient one. Right now our economic overshoot is all carbon fueled--which means we are very far out on a very weak limb.

The 5% Project

by JMG at 8:15 AM on 18 Jul 2007

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