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Details on Dingell's carbon tax

It's not optimal, but he says he's serious about it at least

Posted by David Roberts at 8:57 AM on 20 Jul 2007

As you'll recall, a few weeks ago Rep. John Dingell said in an interview that he plans to introduce a carbon tax bill, "to see how people really feel about this." He expressed doubt that the American people are willing to pay what it will cost.

Reaction from progressives was swift and vicious. Everyone assumed Dingell would deliberately design a horrible bill, fail to support it, watch it go down in flames, and thereby poison the debate. See, e.g., this unsigned L.A. Times editorial.

Now there's a little bit of information about the bill emerging. Seems the Detroit Free Press got Dingell on the phone. Here's what they heard:
Dingell said by phone Wednesday that a gas tax would likely be phased in, and carbon tax revenue would be distributed among Medicare, Social Security and various conservation funds. "Truthfully, I believe this is the way to go, and I'm willing to lose some skin over it," he said. But he expects fierce opposition.

I think it's fair to say that this is not the best way to design a carbon tax bill. The phase-in is good, but most carbon tax advocates agree that the tax should be revenue neutral: it should return the revenue via cuts in other taxes, either payroll or income. Not only does this make the effect more or less economically neutral, it helps build support, since average people see tangible benefits in every paycheck.

For the revenue to disappear into entitlement programs without a trace guarantees that most consumers will encounter only costs and no benefits, at least in the short term. Not a recipe for broad support.

Still, Dingell says he believes in the tax qua policy, and is willing to fight for it. Maybe he's BSing, but if he's serious -- if he's really going to get behind this thing -- he could sure use some backup.

revenue neutrality is key

I'm pretty sure that revenue neutrality is the only hope for a plan like this.  The only way that I can see the American public supporting a tax on their god-given right to waste energy, is if it comes off their income tax bill (which is probably the most-hated tax in our culture).

Dingell must understand this.  So why isn't he doing it this way?  The obvious assumption is that he is trying to poison the whole idea, but I suspect that the real reason is more subtle and political.

Or cut checks

Seriously: cut a check to each household based on the number of people living in it.

This is the suggestion of the sky trust. And it would be even more popular than an income tax cut.

Not for nothing

Did Charlie McBush and President Cheney send us "tax cut checks" (which were nothing more than advances on our tax returns).  These people understand NOTHING except for how to manipulate the masses, and checks seem to work ...

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