This past week, Sen. Sheldon Whitehouse (D-R.I.) introduced a carbon tax amendment to next year’s budget proposals in Senate. Onlookers last saw the amendment before it was derailed by a 58 to 41 vote, with all 45 Republicans voting against it. Just after, Sen. Roy Blunt (R-Mo.) proposed an amendment that would require a 60-vote threshold for any legislation that involves a tax on carbon (at 51 votes, his proposal was more popular).
Though a carbon tax may be more popular than Dwayne O’Rear on a ballot, this partisan split on the carbon tax demands an explanation. For one, oil and natural gas companies have established a firm grip on the legislative processes here in the United States. They have accomplished this by outspending all other energy interest groups in their lobbying influence. Additionally, both parties argue that a carbon tax would burden low-income families, with Republicans also fussing about any new taxation. Most of this dissent is not grounded in reality though, as a well-negotiated tax on carbon could appeal to the sentiments of both parties.
The idea of a carbon tax is nothing new. Nearly 20 countries, including China, Australia and Sweden, have either proposed or fully implemented some sort of tax on carbon dioxide. Though their political systems vary, they are united in their pragmatism. As it turns out, large populations of people enjoy existing, and the earth is an excellent platform for this hobby. While economies benefit in the short term from the consumption of cheap energy, there are external costs that may threaten our pastime.
To relate this point further, imagine that you just bought a car. While it manages to get you from point a to b, sometimes it suddenly accelerates for no reason. (It’s probably a Toyota.) This is incredibly dangerous, and you get into a wreck. Chances are, the manufacturer will compensate all parties affected within this scenario because they are responsible for the damages. While in this case there is a defect, these days a company can be held accountable for virtually any damage caused by a product as long as causality can be demonstrated.
The past 200 years of man-made emissions are changing the planet in fundamental ways, and the science says that carbon dioxide is perhaps the biggest player. We may be setting ourselves up for another kind of crash, but it’s difficult to hold any one party responsible. And assigning a dollar amount to these impacts is even more of a challenge, as we have not even begun to experience the full effects of our changing planet.
As a result, we are left in a position of conflicted reliance, where fossil fuels are deeply integrated into our way of life. We know that every dollar spent on coal, petroleum or natural gas is a bet against our future, but at the moment they are (artificially) cheap. Short of outlawing fossil fuels, a per-ton tax on carbon could turn the tides. If fossil fuel companies were charged for every ton of carbon recovered, this could bring the market price closer to the real price. And for the free market purists out there: fossil fuel subsidies outnumber those for renewable technologies five-to-one. A carbon tax would only level the playing field.
Some have proposed that the revenue collected through a carbon tax could be used to pay off the deficit. This is a nice idea, but as a Sen. Roy Blunt pointed out, low-income families spend the largest portion of their income on goods that would see the largest price spike. If a carbon tax were revenue neutral though, money from the tax would be redistributed equally to taxpayers. This would insulate Americans from any price increases, while allowing sustainable energy sources to be as competitive as they should be. This would also require no expansion of government.
I call that having your cake and eating it too.