Thread by @econnaturalist

Thread on diminished support for carbon taxes

Climatologists and economists have long viewed carbon taxation as the most effective way to curb greenhouse gas emissions. But with public awareness of #climatechange at an all-time high, reformers are now backing away from carbon taxes. Why?

A recurring theme in this week’s NYT Magazine, an issue devoted mostly to the climate crisis, is that carbon taxes are unpopular with voters.
@dleonhardt, nytimes.com/interactive/20…

As David Leonhardt writes, for example, “Energy, for utilities and transportation, is a major cost of living. And across the industrialized world, the middle class and the poor have been struggling with slow income growth.”

But the distributional objection can be easily parried. Properly designed, a revenue-neutral carbon tax would actually provide an economic windfall to low- and middle-income families.

Wealthy families consume WAY more energy than others. They live in bigger houses, drive bigger cars, and take many more plane trips to distant destinations. These families would pay a substantially disproportionate share of any carbon tax.

A simple version of a revenue-neutral carbon tax would redistribute the total revenue collected in equal lump-sum amounts to all taxpayers. Those with below-average carbon footprints would thus get more money back than they had paid in carbon taxes.

Because the carbon footprints of the wealthy are so much larger than others’, many more than half of all taxpayers would therefore be net beneficiaries under a carbon tax.

That low- and middle-income families have experienced income stagnation is therefore no reason to avoid a carbon tax. On the contrary, such a tax is accurately described as a REMEDY for the income stagnation that has plagued most American families!

It’s true that when most voters hear the words “carbon tax,” they think the policy would make them poorer. But isn’t that a solvable communication problem, rather than a reason to abandon carbon taxes?

The explanation isn’t complicated. Billionaire Tom Steyer’s NextGen foundation has spent lavishly in support of measures to reduce greenhouse gases. Why not support an ad campaign explaining why a revenue-neutral carbon tax would have benign distributional effects?

More than three decades ago, compelling logic persuaded experts to favor carbon taxation as the best way to reduce greenhouse gases. That same logic holds with even greater force in the face of today’s more pessimistic climate forecasts.

We should teach, not retreat. It’s exactly the wrong time to abandon support for our most powerful tool for curbing greenhouse gases. As @dwallacewells wrote in the first sentence of THE UNINHABITABLE EARTH, “It is worse, much worse, than you think.”