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Tuesday, May 28, 2013

CBO: Effects of a Carbon Tax on the Economy and the Environment

CBOCongressional Budget Office, Effects of a Carbon Tax on the Economy and the Environment:

Lawmakers could increase federal revenues and encourage reductions in emissions of carbon dioxide (CO2) by establishing a carbon tax, which would either tax those emissions directly or tax fuels that release CO2 when they are burned (fossil fuels, such as coal, oil, and natural gas). Emissions of CO2 and other greenhouse gases accumulate in the atmosphere and contribute to climate changeā€”a long-term and potentially very costly global problem.

The effects of a carbon tax on the U.S. economy would depend on how the revenues from the tax were used. Options include using the revenues to reduce budget deficits, to decrease existing marginal tax rates (the rates on an additional dollar of income), or to offset the costs that a carbon tax would impose on certain groups of people. This study examines how a carbon tax, combined with those alternative uses of the revenues, might affect the economy and the environment.

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What a bunch of bull. How about studying the effects of shifting that money from the private sector to wasteful government and the effects of a carbon tax on consumers, who have to pay higher energy costs and deal with higher retail prices to cover those taxes paid by companies? Nations that have imposed carbon taxes are already reconsidering them. We should reconsider considering carbon taxes any further.

The Five Circles of Carbon Tax Hell

The tax will not be implemented in the politically aseptic world of academic modelers, but in the real world of intense political pressures. Its assumed purity will not survive the onslaught.

Posted by: Woody | May 28, 2013 8:15:04 AM

Well, naturally, I spouted off before reading the entire article, and I'm still not going to read thirty pages of a government study, but it does bring up the effects of reducing the purchasing power of consumers. It also states political realities of the tax.

In practice, however, the carbon tax rate that is economically efficient depends on the way in which lawmakers use the revenues from the tax, the amount of leakage that occurs, and the amount of additional benefits and costs that result from the tax.

Posted by: Woody | May 28, 2013 8:28:38 AM

Hey, Woody. I wish this comment section had "like" buttons. I'd punch it a bunch of times.

...nothing, but nothing done by government is economically efficient.

Posted by: ColoComment | May 28, 2013 11:56:41 AM