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Unfortunately this doesn’t really work in a democracy. It’s just going to end up being too unpopular. The next president is just going to run on “I will cancel

Unfortunately this doesn’t really work in a democracy. It’s just going to end up being too unpopular. The next president is just going to run on “I will cancel the carbon credits!” And then win the election in a landslide and cancel them.

DennisP 4y ago
One option is fee-and-dividend, which pays all the revenue back out to the population, equal amount per capita. You still have an incentive to reduce emissions, because your dividend is the same regardless and you can reduce your fees. And since most people's net emissions are less than average, most people come out ahead.
- adonovan 4y ago
  I've been telling people how great this idea is for years, because it's simple for organizations to plan around as it gradually ratchets up, easy to administer, and sort of progressive in the sense that the poor benefit more (relatively) than the rich. But this year the penny finally dropped for me how demoralizingly futile it is to make rational carbon policy in the US by talking about its merits. The success of the Inflation Reduction Act ($370bn for climate) was entirely due to a cunning political hack: not taxing individuals (only corporations) and reducing the deficit at the same time (by staffing the IRS to enforce existing tax collection laws), so that it could be acceptable to the holdout conservative Democrats.
  - deleted 4y ago
    [deleted]
- nwj 4y ago
  I think I've heard this option called a Pigovian tax before. https://en.wikipedia.org/wiki/Pigovian_tax https://en.wikipedia.org/wiki/Pigovian_tax.
  - mr_toad 4y ago
    A Pigovian tax, set correctly, will actually remove the deadweight loss caused by a negative externality. However, it is very difficult in practice to measure the negative externalities of something like sea level rise, especially when the effect could be centuries in the future.
    - imtringued 4y ago
      A perfect pigovian tax is rarely necessary. Just 10% of the ideal rate is already sufficient in a lot of cases simply because of the fact that a lot of harmful activites are free and not tracked. Let's say there is a wood stove that increases cooking efficiency by 2x, this means a lot less trees have to be cut down for cooking. However to a person for whom trees are free, they aren't going to buy a better stove just to save on emissions, they will only start once they run out of trees which is when it is already too late. By charging a fee per tree, even if it is a token amount, people will start calculating and weighing whether cutting down more trees or less trees and buying the stove is the better option. Once they have made the initial investment they may even tell their neighbours about it. A single person changing their mind, can change the minds of everyone.
- Aunche 4y ago
  At the end of the day, any sort of tax is going to generate a dead weight loss. The amount of money that gets distributed to you with a carbon dividend inevitably is going to be less than your additional tax burden or the consumer surplus from the goods and services you otherwise would have bought without the tax. Of course, you make very good arguments about why the dead weight loss is absolutely dwarfed by the negative externalities of fossil fuel emissions. Even if you don't consider climate change, air pollution is a contributor of over 100,000 deaths in America alone. However, this point is moot if people aren't willing to act on those externalities.
  - Schroedingersat 4y ago
    > At the end of the day, any sort of tax is going to generate a dead weight loss. You say that like it's not the goal. Yes. People will do fewer polluting things. That's the point. The harms from the externalities vastly dwarf any total economic reduction.
  - ericd 4y ago
    A given person will not inevitably get back less than their tax burden, people on average will get back less, but I'm pretty sure the median person will get back more. People who eg. fly a lot will get back less, those who live relatively modest lives will get back a good bit more. The wealthy will disproportionately bear the brunt of a carbon tax, because they tend to live much more energy-intensive lives than the median person.
    - Aunche 4y ago
      Emissions scales very sublinearly with wealth. Someone who is 1000x richer than average isn't going to live in 1000 houses, eat 1000x more beef, or drive 1000 cars simultaneously. This means that they're in a much better position to simply eat the cost of a carbon tax while the poor and middle class will actually have to make the sacrifices to reduce emissions. Even if they're technically be ahead monetarily, they'd feel worse off because they have to organize carpools, turn down the thermostat in the winter, etc.
- rtkwe 4y ago
  Net over a year that's all well and good but the extra wait for that dividend payment to come in will be rough for a lot of people.
  - DennisP 4y ago
    Dividends don't have to go out annually. Estimated taxes would come in quarterly, and it wouldn't be hard for the government to pay out as frequently as social security checks. Each period, adjust payments to make up for discrepancies in the last period.
- thehappypm 4y ago
  This system rewards people for others emitting carbon, no? Doesnt that create an incentive for people to want more emissions?
  - kitkat_new 4y ago
    as a company I want other companies to have non competitive prices, so yes. But why would anyone voluntarily follow that? It's not like money is generated out of nothing.
WalterBright 4y ago
We already tax everything else, including fuel.
- thehappypm 4y ago
  And those taxes are extremely unpopular! And for a carbon tax to work the tax would need to be punitive.
  - WalterBright 4y ago
    All taxes are unpopular, unless they mostly or completely fall on other people. That hasn't stopped taxes in a democracy.
  - colinmhayes 4y ago
    It might feel punitive, but the entire point of pigouvian taxes is that people were taking advantage of not having to pay for externalities. Not having the tax is punitive to the people who are consuming less than the average energy.
    - mr_toad 4y ago
      Unfortunately the people who consume the least energy often have the least political power.
  - imtringued 4y ago
    If we had more unpopular taxes we could have less taxes (quantity and revenue) overall.
oliwary 4y ago
What about introducing a variable environmental toll at the border? It could be based on the environmental rules of the exporting country and the expected emissions of the production and transport of the good. Ideally, this would have the following effects: * Make local manufacturing more competitive - introducing only local regulations gives companies a big incentive to produce in less stringently regulated areas. Correcting this could bring back manufacturing and be politically popular. * Give companies an incentive to develop sustainable processes. * Give companies an incentive to lobby other governments to introduce more stringent rules. * Align cost of goods with actual externalities, motivating people to buy more sustainable products. * The toll revenue could be used to improve carbon saving initiatives, such as public transport and sequestration.
- landemva 4y ago
  Putting America on economic parity with manufacturing polluters like China and Mexico is reasonable. The environmental tariffs would be helpful to stop companies from green-washing by manufacturing the iGadgets in polluting countries.
tgsovlerkhgsel 4y ago
That's why you take the revenue from the tax and distribute it across the population. The slight rise in prices is less noticeable than the check/deposit you get every month/year. And the next president will lose the election in a landslide for ending the free money.

DennisP 4y ago

One option is fee-and-dividend, which pays all the revenue back out to the population, equal amount per capita. You still have an incentive to reduce emissions, because your dividend is the same regardless and you can reduce your fees. And since most people's net emissions are less than average, most people come out ahead.

adonovan 4y ago
I've been telling people how great this idea is for years, because it's simple for organizations to plan around as it gradually ratchets up, easy to administer, and sort of progressive in the sense that the poor benefit more (relatively) than the rich. But this year the penny finally dropped for me how demoralizingly futile it is to make rational carbon policy in the US by talking about its merits. The success of the Inflation Reduction Act ($370bn for climate) was entirely due to a cunning political hack: not taxing individuals (only corporations) and reducing the deficit at the same time (by staffing the IRS to enforce existing tax collection laws), so that it could be acceptable to the holdout conservative Democrats.
- deleted 4y ago
  [deleted]
nwj 4y ago
I think I've heard this option called a Pigovian tax before. https://en.wikipedia.org/wiki/Pigovian_tax https://en.wikipedia.org/wiki/Pigovian_tax.
- mr_toad 4y ago
  A Pigovian tax, set correctly, will actually remove the deadweight loss caused by a negative externality. However, it is very difficult in practice to measure the negative externalities of something like sea level rise, especially when the effect could be centuries in the future.
  - imtringued 4y ago
    A perfect pigovian tax is rarely necessary. Just 10% of the ideal rate is already sufficient in a lot of cases simply because of the fact that a lot of harmful activites are free and not tracked. Let's say there is a wood stove that increases cooking efficiency by 2x, this means a lot less trees have to be cut down for cooking. However to a person for whom trees are free, they aren't going to buy a better stove just to save on emissions, they will only start once they run out of trees which is when it is already too late. By charging a fee per tree, even if it is a token amount, people will start calculating and weighing whether cutting down more trees or less trees and buying the stove is the better option. Once they have made the initial investment they may even tell their neighbours about it. A single person changing their mind, can change the minds of everyone.
Aunche 4y ago
At the end of the day, any sort of tax is going to generate a dead weight loss. The amount of money that gets distributed to you with a carbon dividend inevitably is going to be less than your additional tax burden or the consumer surplus from the goods and services you otherwise would have bought without the tax. Of course, you make very good arguments about why the dead weight loss is absolutely dwarfed by the negative externalities of fossil fuel emissions. Even if you don't consider climate change, air pollution is a contributor of over 100,000 deaths in America alone. However, this point is moot if people aren't willing to act on those externalities.
- Schroedingersat 4y ago
  > At the end of the day, any sort of tax is going to generate a dead weight loss. You say that like it's not the goal. Yes. People will do fewer polluting things. That's the point. The harms from the externalities vastly dwarf any total economic reduction.
- ericd 4y ago
  A given person will not inevitably get back less than their tax burden, people on average will get back less, but I'm pretty sure the median person will get back more. People who eg. fly a lot will get back less, those who live relatively modest lives will get back a good bit more. The wealthy will disproportionately bear the brunt of a carbon tax, because they tend to live much more energy-intensive lives than the median person.
  - Aunche 4y ago
    Emissions scales very sublinearly with wealth. Someone who is 1000x richer than average isn't going to live in 1000 houses, eat 1000x more beef, or drive 1000 cars simultaneously. This means that they're in a much better position to simply eat the cost of a carbon tax while the poor and middle class will actually have to make the sacrifices to reduce emissions. Even if they're technically be ahead monetarily, they'd feel worse off because they have to organize carpools, turn down the thermostat in the winter, etc.
rtkwe 4y ago
Net over a year that's all well and good but the extra wait for that dividend payment to come in will be rough for a lot of people.
- DennisP 4y ago
  Dividends don't have to go out annually. Estimated taxes would come in quarterly, and it wouldn't be hard for the government to pay out as frequently as social security checks. Each period, adjust payments to make up for discrepancies in the last period.
thehappypm 4y ago
This system rewards people for others emitting carbon, no? Doesnt that create an incentive for people to want more emissions?
- kitkat_new 4y ago
  as a company I want other companies to have non competitive prices, so yes. But why would anyone voluntarily follow that? It's not like money is generated out of nothing.

WalterBright 4y ago

We already tax everything else, including fuel.

thehappypm 4y ago
And those taxes are extremely unpopular! And for a carbon tax to work the tax would need to be punitive.
- WalterBright 4y ago
  All taxes are unpopular, unless they mostly or completely fall on other people. That hasn't stopped taxes in a democracy.
- colinmhayes 4y ago
  It might feel punitive, but the entire point of pigouvian taxes is that people were taking advantage of not having to pay for externalities. Not having the tax is punitive to the people who are consuming less than the average energy.
  - mr_toad 4y ago
    Unfortunately the people who consume the least energy often have the least political power.
- imtringued 4y ago
  If we had more unpopular taxes we could have less taxes (quantity and revenue) overall.

oliwary 4y ago

What about introducing a variable environmental toll at the border? It could be based on the environmental rules of the exporting country and the expected emissions of the production and transport of the good. Ideally, this would have the following effects: * Make local manufacturing more competitive - introducing only local regulations gives companies a big incentive to produce in less stringently regulated areas. Correcting this could bring back manufacturing and be politically popular. * Give companies an incentive to develop sustainable processes. * Give companies an incentive to lobby other governments to introduce more stringent rules. * Align cost of goods with actual externalities, motivating people to buy more sustainable products. * The toll revenue could be used to improve carbon saving initiatives, such as public transport and sequestration.

landemva 4y ago
Putting America on economic parity with manufacturing polluters like China and Mexico is reasonable. The environmental tariffs would be helpful to stop companies from green-washing by manufacturing the iGadgets in polluting countries.

tgsovlerkhgsel 4y ago

That's why you take the revenue from the tax and distribute it across the population. The slight rise in prices is less noticeable than the check/deposit you get every month/year. And the next president will lose the election in a landslide for ending the free money.