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Wednesday, January 30, 2013

NY Times: Is U.S. Ready for a Carbon Tax to Tackle Climate Change?

NYTNew York Times:  In Energy Taxes, Tools to Help Tackle Climate Change:

The erratic weather across the country in the last couple of years seems to be softening Americans’ skepticism about global warming. ... In his inaugural address, President Obama wove Hurricane Sandy and last year’s drought into a stirring plea to address climate change. “The failure to do so would betray our children and future generations,” the president said.

But even as he put global warming at the top of his agenda, he avoided dwelling on how much it would cost to address. And nowhere in his speech did he allude to the most powerful tool to address the problem: a tax on the use of energy. ...

Top economists agree a tax on fuels and the carbon they spew into the atmosphere would be the cheapest way to combat climate change. Most advanced countries rely on some variant of this tax. The question is whether the prospect of more droughts and more powerful hurricanes will push Americans to embrace it, too.

Among the 34 industrialized nations of the Organization for Economic Cooperation and Development, these taxes average about $68.4 per metric ton of carbon dioxide. The United States, by contrast, has a gas tax to pay for highway improvement, and that’s about it. Total federal taxes on energy amount to $6.30 per ton.

Some states add excise taxes — California has a gas tax equivalent to about $46.50 per ton of carbon dioxide and a $2.33-per-ton tax on jet kerosene. But, according to a review by the O.E.C.D., the federal government is unique in imposing no taxes on other energy use, from residential heating to power generation.

A tax on energy could single-handedly take on climate change. For starters, it would encourage people and businesses to burn less, reducing emissions at a stroke. One study found that a carbon tax of $15 per ton would reduce greenhouse emissions by 14% as people sought to save energy by driving less, insulating their homes and switching to renewable fuels, among other things.

What’s more, it would raise lots of money. Estimates reviewed in a report by the Tax Policy Center ranged from 0.6 percent of the nation’s gross domestic product — for a tax of $20 per ton of carbon dioxide — to 1.6% of GDP for a tax of $41 per ton. Consider this: 1.6% of GDP is $240 billion a year. And $41 per ton amounts to an extra 35 cents a gallon of gas.

(Hat Tip: Mike Talbert.)

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Comments

The Times should worry more about the decline of newspapers and less about trying to raise everyone's taxes.

Posted by: michael livingston | Jan 31, 2013 5:53:14 AM