Maya MacGuineas and Adam Carasso have come up with a new way to structure a carbon tax:
The new tax shouldn't be a pure "carbon tax," which would saddle coal-based energy production with steep price increases while allowing us to maintain our national addiction to oil with little abatement. Rather, a comprehensive energy tax ought to discourage in a relatively uniform way the use of all energy sources that contribute to global warming.
I don't get that at all. If an electric car drawing its electricity from a natural gas power plant (say) contributes to global warming, but does so to a much lower extent than does a car with an internal combustion engine burning liquid coal, surely this difference should be reflected in our tax policy. Our current energy mix is so carbon intensive that there are plenty of technologies that would both "contribute to global warming" and also constitutes progress toward reducing carbon emissions. One wants a tax that rewards such technologies, but rewards them less than even cleaner ones. That means a government-auction of emissions permits, or a simple carbon tax. What's the advantage of the alternative? It's a bit more friendly to coal companies that'll fight you to the death anyway?
He's right, of course. What we're talking about here is basically the difference between a flat tax and a progressive tax, but on greenhouse emissions. Keep in mind that, no matter how it's structured, if you buy a car with an internal combustion engine, and never drive it, then you're not buying (or burning) gasoline and therefore not paying anything in carbon taxes. Likewise, if you buy the greenest of all possible automobiles--as Matt suggests, an electric car drawing its power from a natural gas power plant--but then drive it two hundred thousand miles a year, then you're probably paying quite a bit in carbon taxes. But if the point is not per se to create windfall revenues for the government but to actually get people to make greener decisions faster, then it makes all the sense in the world to impose lower rates on emissions sources that provide better energy to emissions ratios
Of course, the reason that a person with excessive driving habits would own an electric car in the first place is precisely the built-in incentive not to pay the extra taxes. In this way what MacGuineas and Carasso are talking about is a bit better than a flat income tax, in that the incentive to "do less dirty stuff" increases the more "dirty stuff" you do. But there's no reason at least at first to slow down progress by making that relationship linear with overall efficiency.
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