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Though still considered a long shot, bipartisan support for instituting a tax on the largest US carbon and greenhouse gas emitters is being revived. Coupling it with payments to taxpayers and emphasizing the economic benefits would help muster support, according to policy experts. [...]

Air Quality

Drought + Superstorm Sandy + Looming Fiscal Cliff —> Revived Talk Of A Carbon Tax

Though still considered a long shot, bipartisan support for instituting a tax on the largest US carbon and greenhouse gas emitters is being revived. Coupling it with payments to taxpayers and emphasizing the economic benefits would help muster support, according to policy experts. […]

Notable in their absence during the recently concluded presidential election, Superstorm Sandy and historic drought are among a string of extreme weather events that are nonetheless driving climate change and human greenhouse gas emissions back toward the forefront of politics and government. This, coupled with the looming so-called “fiscal cliff,” also seems to be waking up Congress and the Obama administration, and getting them to reconsider instituting a carbon tax on the US’ largest carbon and greenhouse gas emitters, such as power producers and oil refiners.

With the US economy burdened by a massive run-up in public Treasury debt accumulated as a result of the economic emergency rescue and bank bailout packages, as well as the wars in Afghanistan and Iraq, could be cut in half by a $20 per ton tax on carbon emissions, a recent report by the Congressional Research Service determined.

In addition, the US Treasury has commissioned the National Academies of Science (NAS) to carry out an analysis of the effects of a carbon tax, along with other means the government could use to change the nature of its revenue-raising activities so as to encourage reductions in fossil fuel use, carbon and greenhouse gas (GHG) emissions. Due to be completed in Spring 2013, funding for the NAS study, which is to be undertaken by a panel of economic specialists, is the latest initiative funded as a result of legislation enacted during the George W. Bush administration in 2008 but not funded until 2009, Reuters noted in a report on this matter.

A US Carbon Tax: Pro, Con and Bipartisan Support

Emphasizing the positive and beneficial economic (as opposed to environmental and social) effects, enacting a carbon tax would generate greater bipartisan political support, the Bipartisan Policy Center’s Paul Bledsoe, who from 1998 to 2000 served as communications director of the White House Climate Change Task Force under President Clinton, told Reuters. Instituting a carbon tax on polluters would be “better for the economy than our current taxes on work,” he was quoted as saying.

Opinions as to the likelihood of a carbon tax being instituted vary widely, though the majority view seems to consider it unlikely. Opposition from the Republican Party has been strident and staunch, and Republicans maintain control of the House of Representatives.

That said, “a number of moderate Republicans, including a few economists that advised Republican presidential candidate Mitt Romney, have declared their support for a carbon tax, leading some to believe there is a chance for bipartisan support in Congress,” according to Reuters, which noted that “Harvard professor Gregory Mankiw, economic adviser to Romney, wrote in a 2007 column that ‘if we want to reduce global emissions of carbon, we need a global carbon tax.’”

Former Republican Congressman Sherwood Boehlert and Wayne Gilchrest in February joined House Democrats Henry Waxman and Ed Markey in support of a carbon tax.

One variation on the carbon tax theme calls for a portion of the revenue collected to be redistributed by passing it on to taxpayers. Longstanding Republican luminary and former Secretary of State in the Reagan administration George Shultz has been one of the few party thought leaders that for years has been advocating for a redistributive carbon tax.

Under the leadership of Prime Minister Julia Gillard, Australia managed to institute a carbon tax on its 500 largest emitters late last year following years of fierce opposition that hasn’t slackened much since being enacted. The bill also aims to cut taxes and increase government pension payments, as well as spur clean and renewable energy investment and provide relief to some affected industries, including steel.

As for a carbon tax’s prospects here in the US, “I’m quite a skeptic regarding carbon taxes, and I doubt that President Obama could gain enough support in the House to enact one even as part of a broader tax-reform package,” Reuters quoted American Enterprise Institute resident scholar Kenneth Green. “But I could be wrong.”

Nonetheless, AEI has been criticized by the Republican Party for holding closed-door discussions about enactment of a carbon tax. Along with the Brookings Institution, Resources for the Future and the International Monetary Fund (IMF), AEI is going to come out in the open on the topic next month, hosting a carbon tax forum at its Washington, D.C. headquarters next month.

Photo Credit: Martin Johnson

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Written By

I've been reporting and writing on a wide range of topics at the nexus of economics, technology, ecology/environment and society for some five years now. Whether in Asia-Pacific, Europe, the Americas, Africa or the Middle East, issues related to these broad topical areas pose tremendous opportunities, as well as challenges, and define the quality of our lives, as well as our relationship to the natural environment.


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