4 ms·

Giving the carbon tax revenue back to people as cash payments could help politically.

by guelo 5y ago

dahfizz 5y ago
Doesn't that ruin the incentive structure? Your cash payments are higher when carbon use is higher.
- stormbrew 5y ago
  In this kind of scheme, you don't get what you paid back as cash, you get something more like a dividend of the revenues (possibly just as a non-refundable income tax rebate or something, or as a dividend check given to all adults, depending on the particulars of your region's tax aversions). So you're actually incentivized to consume less, because you get more out of it if your tax payments are less than your dividend. Obviously there might be some perverse incentives to like.. causing a global increase in emissions while keeping your own small somehow but those are probably hard to significantly profit from.
hardtke 5y ago
Canada promised to do that and the proposal was still wildly unpopular and abandoned. If you've build your life around no carbon tax (e.g. you live far from work and need to drive) you will personally suffer from such a change and will vocally lobby against the change. We end up with things like the Yellow Vest movement in France or the political instability that happens when any government tries to reduce fuel subsidies. It seems that voters are more sensitive to the price of gas than any other issue and any political party that causes the price of gas to go up gets voted out of office. Paul Krugman wrote a post recently showing that US consumers' inflation expectation exactly tracks the price of gas. I've concluded that any consumer impacting carbon tax cannot work in a democratic system. We need subsidies (both explicit and hidden) to reduce our carbon emissions.
- stormbrew 5y ago
  > Canada promised to do that and the proposal was still wildly unpopular and abandoned. <...> I've concluded that any consumer impacting carbon tax cannot work in a democratic system. We have a carbon tax in Canada and it's probably not going away any time soon (it is, in fact, scheduled to continue going up), so I'm not sure what you mean here. The provinces can do a rebate/dividend if they want and/or run their own system designed that way but I'm not sure if any have. I'm not sure if your first statement is just saying we abandoned a rebate, but your last statement implies you think any consumer carbon pricing is impossible regardless of that, while your example says otherwise.

Giving the carbon tax revenue back to people as cash payments could help politically.

by guelo 5y ago

Giving the carbon tax revenue back to people as cash payments could help politically.

dahfizz 5y ago

Doesn't that ruin the incentive structure? Your cash payments are higher when carbon use is higher.

stormbrew 5y ago
In this kind of scheme, you don't get what you paid back as cash, you get something more like a dividend of the revenues (possibly just as a non-refundable income tax rebate or something, or as a dividend check given to all adults, depending on the particulars of your region's tax aversions). So you're actually incentivized to consume less, because you get more out of it if your tax payments are less than your dividend. Obviously there might be some perverse incentives to like.. causing a global increase in emissions while keeping your own small somehow but those are probably hard to significantly profit from.

hardtke 5y ago

Canada promised to do that and the proposal was still wildly unpopular and abandoned. If you've build your life around no carbon tax (e.g. you live far from work and need to drive) you will personally suffer from such a change and will vocally lobby against the change. We end up with things like the Yellow Vest movement in France or the political instability that happens when any government tries to reduce fuel subsidies. It seems that voters are more sensitive to the price of gas than any other issue and any political party that causes the price of gas to go up gets voted out of office. Paul Krugman wrote a post recently showing that US consumers' inflation expectation exactly tracks the price of gas. I've concluded that any consumer impacting carbon tax cannot work in a democratic system. We need subsidies (both explicit and hidden) to reduce our carbon emissions.

stormbrew 5y ago
> Canada promised to do that and the proposal was still wildly unpopular and abandoned. <...> I've concluded that any consumer impacting carbon tax cannot work in a democratic system. We have a carbon tax in Canada and it's probably not going away any time soon (it is, in fact, scheduled to continue going up), so I'm not sure what you mean here. The provinces can do a rebate/dividend if they want and/or run their own system designed that way but I'm not sure if any have. I'm not sure if your first statement is just saying we abandoned a rebate, but your last statement implies you think any consumer carbon pricing is impossible regardless of that, while your example says otherwise.