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> Assume that an agent scales up some profitable carbon-emitting activity, and to make the math simple they personally double global carbon output. By virtue of

by ajuc 6y ago

> Assume that an agent scales up some profitable carbon-emitting activity, and to make the math simple they personally double global carbon output. By virtue of the fact that we're in a superlinear externality regime they now have to pay $N in taxes while causing damage much greater than $N. I don't understand why you focus so much on "who gets the total above the threshold". It's not a valid question, because you can rearrange the actors and then it would be someone else who tops it off. It's a meaningless question. Let's say you have 10 agents with emissions e(1)=e(2)=...=e(8)=1 and e(9)=e(10)=4. Threshold is 10. If you add up going from 1 to 10 - the 9th agent crosses the threshold. If you add up going from 10 to 1 - the 6th agent crosses the threshold. By changing the order of the addition you can blame the externalities on anybody you want :) > the most straightforward way to do that is to set a cap at the level you don't want to exceed and divvy out the credits as you see fit It's an independent system that needs to be maintained and supervised, meanwhile we already have tax office and the whole system of state institutions focused on making sure people pay taxes. Besides measuring emissions is hard, measuring fuel usage is easy (we already do it for taxing purposes). > to avoid exceeding your desired limit you just set the limit and ban exceeding it Then you have to somehow decide who gets how much. It turns a self-tuning economic system into a centrally planned economy and introduces politics into it. > the timescales involved in updating the tax code leave plenty of room for exploitation I see no problem with changing oil tax weekly in the transition period. I doubt we'll need more than 5 corrections.

hansvm 6y ago
> I don't understand why you focus so much on "who gets the total above the threshold". I don't care about that ordering at all. Assume N actors are each producing on average a mass M of carbon (in some unit time). We set a carbon production tax based on that. Some combination of actors scales up production so that the total volume being produced is 2NM -- we don't care which ones. Total taxes double while total externalities more than double (potentially greatly so). > It's an independent system that needs to be maintained and supervised That's a fair point. We have similar systems elsewhere for, e.g., fishery maintenance, but it would require something above and beyond what we have now. > Besides measuring emissions is hard, measuring fuel usage is easy Eh. Dealing with trace pollutants and particulates would be harder but for carbon you could easily just add up the major sources and sinks on the supply side rather than trying to actually measure the output. As I'm writing that though, I'm being swayed to your side a bit and agree that's bookkeeping the average household probably wouldn't want to have to consider (so...we're allowed X gallons of gas as long as we don't buy any coal or....). > Then you have to somehow decide who gets how much. It turns a self-tuning economic system into a centrally planned economy Potentially. Or you could open up an auction and treat the proceeds as a form of tax. > and introduces politics into it. That's going to be a problem with any solution. > I see no problem with changing oil tax weekly in the transition period. Is there any tax anywhere that changes faster than yearly? Where does it get applied? Do gas station owners in the middle of nowhere have to keep track of probably wild swings in taxes? Do we apply portions of it at several places in the supply chain and run the risk of somebody creating a more streamlined supply chain around the current tax law? > I doubt we'll need more than 5 corrections. I doubt we'll get more than 5 corrections. I bet we would need them.

by ajuc 6y ago

hansvm 6y ago

> I don't understand why you focus so much on "who gets the total above the threshold". I don't care about that ordering at all. Assume N actors are each producing on average a mass M of carbon (in some unit time). We set a carbon production tax based on that. Some combination of actors scales up production so that the total volume being produced is 2NM -- we don't care which ones. Total taxes double while total externalities more than double (potentially greatly so). > It's an independent system that needs to be maintained and supervised That's a fair point. We have similar systems elsewhere for, e.g., fishery maintenance, but it would require something above and beyond what we have now. > Besides measuring emissions is hard, measuring fuel usage is easy Eh. Dealing with trace pollutants and particulates would be harder but for carbon you could easily just add up the major sources and sinks on the supply side rather than trying to actually measure the output. As I'm writing that though, I'm being swayed to your side a bit and agree that's bookkeeping the average household probably wouldn't want to have to consider (so...we're allowed X gallons of gas as long as we don't buy any coal or....). > Then you have to somehow decide who gets how much. It turns a self-tuning economic system into a centrally planned economy Potentially. Or you could open up an auction and treat the proceeds as a form of tax. > and introduces politics into it. That's going to be a problem with any solution. > I see no problem with changing oil tax weekly in the transition period. Is there any tax anywhere that changes faster than yearly? Where does it get applied? Do gas station owners in the middle of nowhere have to keep track of probably wild swings in taxes? Do we apply portions of it at several places in the supply chain and run the risk of somebody creating a more streamlined supply chain around the current tax law? > I doubt we'll need more than 5 corrections. I doubt we'll get more than 5 corrections. I bet we would need them.