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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 inevitab

by 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.
  - DennisP 4y ago
    It's true that someone rich won't be especially bothered by fee-and-dividend, even though they're paying out more than they're getting back. It won't be an effective tool for reducing the emissions of rich people. It's also true that a person with lower-than-average emissions will pay out less than they get back. They'll have a strong incentive to reduce emissions, but even if they don't reduce emissions they'll be better off than before. These people will be the majority. The people who might feel worse off are those who emit a bit more than average without being rich. They'll need to modify their behaviors if they want to come out ahead. Of course that's part of the whole point. A lot of people might actually be ok with changing their behaviors, if they know everybody's doing it so it will actually make a difference. Right now we have this public goods situation where the outcome is going to be the same regardless of what you personally do. Dealing with public goods situations is the main reason for taxes in general; it's hard to fund roads with voluntary donations, so most people are ok with paying taxes for roads. The other benefit of fee-and-dividend is that it makes low-carbon energy sources more competitive. It's not just about getting people to carpool or whatever, it's about getting fossil fuels off the grid and the roads, because they just can't compete. Of course if that works, the end result might be higher prices that don't get reflected in the dividend. But we don't end up in a apocalyptic nightmare, so there's that.
  - imtringued 4y ago
    Rich people easily produce 100 tons of CO2 emissions or more per person. If they eat the cost of a carbon tax with a carbon dividend that is effectively a donation to less wealthy people. Wealthy people own businesses and those businesses have a strong incentive to reduce emissions, when they do, they end up reducing the tax burden on their consumers.
  - ericd 4y ago
    You’re not wrong about the sublinearity, though someone maintaining a $20M mansion on 20 acres is going to use many times the energy maintaining it, especially when you consider the materials used for maintenance. The average person wouldn’t have to organize carpools, though it’d certainly be incentivized - at least at the beginning, I’m assuming most wouldn’t, so not doing that, you’d still be a net recipient of tax money. But part of the whole point is that we can’t continue living exactly the same way, if we don’t want to destroy ourselves, and especially our children.
imtringued 4y ago
>At the end of the day, any sort of tax is going to generate a dead weight loss The entire point of a pigovian tax is to create a deadweight loss proportional to the harm an externality causes. >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 As I already said, the difference between what you pay in and get out is an incentive to make you cease the activity that produces the harmful externality. >Of course, you make very good arguments about why the dead weight loss is absolutely dwarfed by the negative externalities of fossil fuel emissions. That is how a pigovian tax is supposed to work. >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. This is irrelevant, lots of countries have adopted carbon taxes. The benefits are obvious, less bureaucracy for businesses, more money to poor people, less shaming for a lack of personal action, mitigating climate change, less corruption and wasteful spending. The alternative to carbon taxes isn't no carbon taxes, the alternative is more micromanagement by the government which is more likely to result in even bigger deadweight losses which are unlikely to be proportional to the amount of negative externalities that are being avoided.

by Aunche 4y ago

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.
- DennisP 4y ago
  It's true that someone rich won't be especially bothered by fee-and-dividend, even though they're paying out more than they're getting back. It won't be an effective tool for reducing the emissions of rich people. It's also true that a person with lower-than-average emissions will pay out less than they get back. They'll have a strong incentive to reduce emissions, but even if they don't reduce emissions they'll be better off than before. These people will be the majority. The people who might feel worse off are those who emit a bit more than average without being rich. They'll need to modify their behaviors if they want to come out ahead. Of course that's part of the whole point. A lot of people might actually be ok with changing their behaviors, if they know everybody's doing it so it will actually make a difference. Right now we have this public goods situation where the outcome is going to be the same regardless of what you personally do. Dealing with public goods situations is the main reason for taxes in general; it's hard to fund roads with voluntary donations, so most people are ok with paying taxes for roads. The other benefit of fee-and-dividend is that it makes low-carbon energy sources more competitive. It's not just about getting people to carpool or whatever, it's about getting fossil fuels off the grid and the roads, because they just can't compete. Of course if that works, the end result might be higher prices that don't get reflected in the dividend. But we don't end up in a apocalyptic nightmare, so there's that.
- imtringued 4y ago
  Rich people easily produce 100 tons of CO2 emissions or more per person. If they eat the cost of a carbon tax with a carbon dividend that is effectively a donation to less wealthy people. Wealthy people own businesses and those businesses have a strong incentive to reduce emissions, when they do, they end up reducing the tax burden on their consumers.
- ericd 4y ago
  You’re not wrong about the sublinearity, though someone maintaining a $20M mansion on 20 acres is going to use many times the energy maintaining it, especially when you consider the materials used for maintenance. The average person wouldn’t have to organize carpools, though it’d certainly be incentivized - at least at the beginning, I’m assuming most wouldn’t, so not doing that, you’d still be a net recipient of tax money. But part of the whole point is that we can’t continue living exactly the same way, if we don’t want to destroy ourselves, and especially our children.

imtringued 4y ago

>At the end of the day, any sort of tax is going to generate a dead weight loss The entire point of a pigovian tax is to create a deadweight loss proportional to the harm an externality causes. >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 As I already said, the difference between what you pay in and get out is an incentive to make you cease the activity that produces the harmful externality. >Of course, you make very good arguments about why the dead weight loss is absolutely dwarfed by the negative externalities of fossil fuel emissions. That is how a pigovian tax is supposed to work. >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. This is irrelevant, lots of countries have adopted carbon taxes. The benefits are obvious, less bureaucracy for businesses, more money to poor people, less shaming for a lack of personal action, mitigating climate change, less corruption and wasteful spending. The alternative to carbon taxes isn't no carbon taxes, the alternative is more micromanagement by the government which is more likely to result in even bigger deadweight losses which are unlikely to be proportional to the amount of negative externalities that are being avoided.