Put a Price on Carbon

In a carbon-constrained world,a permanent and increasing U.S. carbon tax is essential to reduce the emissions that are driving global warming and to level the playing field with the highly-subsidized fossil fuels (coal, oil and gas).  Simply put, a carbon tax is a tax on the carbon content of fossil fuels (coal, oil, gas).

According to the Carbon Tax Center, a carbon tax is the most economically efficient means to convey crucial price signals and spur carbon-reducing investment. They’ve prepared a spreadsheet that shows how fast emissions will fall.

Protecting the Consumer

Carbon taxes should be phased in so businesses and households have time to adapt.  They also should be revenue-neutral. Simply put, money from a revenue-neutral carbon tax would be returned or recycled to the economy through reductions in other taxes such as those on labor or capital. OR, revenues would be returned directly to consumers through a ‘dividend’ process.

Making a carbon tax revenue neutral in this way not only provides a way to help reduce the burden of emission reductions on the average family, but also provides an incentive for consumers to lower their energy consumption through lifestyle changes and the goods they consume (conservation and efficiency).  In other words, the less fuel that is used, the larger the return or dividend will be paid to the individual or household.

A revenue neutral carbon tax should be designed to protect the poor.  One way would be to create a refundable Low Income Climate Action Tax Credit that ensures those with lower incomes are compensated for the carbon tax.

But Is There Support?

Supportfor a carbon tax is growing steadily among public officials; economists; scientists; policy experts; business, religious, and environmental leaders; and ordinary citizens. Administering a carbon tax would use existing tax collection mechanisms.  It would be paid “upstream,” at the point where fuels are extracted from the earth and put into the stream of commerce, or imported into the U.S. Fuel suppliers and processors would pass along the cost of the tax to the extent that market conditions allow.

Here’s a sample list of leaders currently voicing their support:

• Senator Christopher Dodd (D-Connecticut).

• New York City Mayor Michael R. Bloomberg.

• James Hansen, Director, NASA Goddard Institute for Space Studies.

• Lester Brown, Earth Policy Institute.

• Carl Pope, former Director, Sierra Club.

• Former Vice-President Al Gore.

• Ralph Nader, Public Citizen.

Click here to see a more comprehensive and growing list.