Taxing carbon makes sense

A tax everyone can love

Doyle McManus, LA Times
April 21, 2013

The chairmen of Congress' primary tax committees, Sen. Max Baucus (D-Mont.) and Rep. Dave Camp (R-Mich.), have launched a bipartisan effort to reform our messy, inefficient federal tax law. They've agreed to look for ways to lower tax rates on both individuals and corporations and at the same time "close loopholes."

But Baucus and Camp are going to run into a big problem: One taxpayer's "loophole" is another's sacred birthright. The only deductions in the personal income tax code big enough to make a significant difference in revenue are the ones for home mortgage interest, charitable contributions and state and local taxes. And every previous attempt to trim or limit them has run into a buzz saw of opposition.

So here's another good bipartisan idea that the tax committees should consider: a new federal tax on emissions — more frequently called a carbon tax.

We already know that we use more energy from oil, gas and coal than we really need. (America consumes the equivalent of about 48 barrels of oil per person per year; Germany, with the healthiest economy in Europe, consumes just 26.) We know that lower consumption would make us less dependent on other countries for energy, a goal every president since Richard Nixon has pursued. We know that oil and coal produce air pollution, which we'd like to reduce. And we know that those fuels emit carbon dioxide, which contributes to global warming.

Economists call the hidden costs of energy consumption — the prices of climate change, pollution and national security — "externalities." They're real costs, but they're not included in the price of the gasoline you put in your car or the electricity you use at home.

(More here.)