Flake Carbon Tax

16May09

Via E-mail Optimo directs me to check out the Flake carbon tax bill. Here’s the pitch from Rep. Bob Inglis & Dr. Laffer :

CONSERVATIVES don’t support tax increases that are veiled as “cap and trade” schemes for pollution permits. But offer us a tax swap, and we could become the new administration’s best allies on climate change.

A climate-change bill withered in Congress this summer because families don’t need an enormous, and hidden, tax increase. If the bill’s authors had instead proposed a simple carbon tax coupled with an equal, offsetting reduction in income taxes or payroll taxes, a dynamic new energy security policy could have taken root.
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We need to impose a tax on the thing we want less of (carbon dioxide) and reduce taxes on the things we want more of (income and jobs). A carbon tax would attach the national security and environmental costs to carbon-based fuels like oil, causing the market to recognize the price of these negative externalities.

Nuclear power plants would then compete with coal-fired plants. Wind and solar power would have a shot against natural gas. Trains would compete with trucks. We would clean the air, create wealth and jobs through a new technology boom and drastically improve our national security.

This bill would be an unequivocal improvement over nothing, but the critical issue is if it’s better then Waxman-Markey. I see a couple issues holding up my support for this plan.

Firstly, how would it help the working poor or unemployed deal with higher energy costs. As it’s presented it would be good for the middle class, but it’s unclear if it would protect low income Americans. Sadly you could say the same thing about Waxman-Markey, but the issue still needs to be addressed before it will get progressive support.

Secondly, is the issue of targeting carbon emissions reductions. This bill looks like a good start, but does it go far enough to reduce carbon emissions over the long term. This is a problem with every carbon tax plan I’ve ever read about and Jeff Flake isn’t going to be the guy to resolve this issue

Thirdly, and more importantly is the issue of political support. The truth is Republicans don’t want a carbon tax, even with proportional tax reductions elsewhere. If they did they would have proposed this sometime in the last six years when had control the White House and/or Congress, instead we’re seeing this come down the pipe only after the House looks ready to pass cap and trade, the Senate might go along with it, and The White House will sign it into law.

The GOP would only vote for a carbon tax/income tax reduction if 1) It won’t become law regardless, or 2) it will prevent a law they like less from be enacted. Even if this bill is better then the cap and trade compromise, it would only be worth our time if had real political legs.

That means Senate co-sponsors. If five or more GOP Senators loudly and credibly endorsed this bill, then you could start to envision a winning coalition for this alternative. Until then it’s not really the Republican plan, just one hundreds of plans supported by no political meaningful coalition.

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Tags: Cap and Trade, Carbon Tax, Climate Change, Jeff Flake, Waxman-Markey