Paul L. Caron

Friday, March 6, 2009

Bartlett: A Carbon Tax Is Better Than Cap-And-Trade

Forbes:  A Carbon Tax Is Better Than Cap-And-Trade, by Bruce Bartlett:

I think a straightforward carbon tax would be preferable to a cap-and-trade system. It would be much quicker and easier to implement, provide greater transparency and certainty of the cost to businesses and be less prone to political manipulation. (See this new paper by Reuven Avi-Yonah and David Uhlmann of the University of Michigan Law School, and this article by Yale economist William Nordhaus.) The question of whether anything needs to be done about global warming is another matter altogether. I'm just saying that if something is going to be done, then a carbon tax is better than cap-and-trade.

The Republicans' impulse undoubtedly will be to put most of their effort into fighting cap-and-trade rather than tax increases on the rich, because it can more easily be portrayed as a tax on working families. But at least it would be a way of getting them to pay something to support the general operations of government such as national defense, which benefits everyone equally.

If cap-and-trade goes down, the Obama administration may just use its regulatory power to deal with global warming, which yields no revenue to the government and raise taxes on the wealthy even more than it planned.

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