Want less intrusive government and good policy – US influencers

Bloomberg reports the US republicans can warm to a carbon tax. Why? Because it is a solution that does not require subsidies to work and it allows the market forces to set the economic response. The hook – all the money is used to offset income tax.

Now back home, despite previously advocating a Carbon Tax as late as 2009, the conservative Australian Government is set about to dismantle the carbon price (also referred to as the carbon tax) and preferring to introduce other taxes/charges/fees that will be greater than the impost of the Carbon Tax. Considerable opposition to the plan is gathering pace, and it is based on the uncertainty of the alternative measures.

So how do the Americans intend to sell the Carbon Tax and what is the appeal that is persuasive for the Republicans? For a start in the main economists agrees a tax is the way to put downward pressure on emissions. The Republicans don’t like quantitative emissions controls, caps on emissions, or subsidies. However, they do like market forces to organise an economic response. The selling point is that emission can be cut where the market finds it is easier and cheaper to do so.

Now we hear the argument: ‘Some’ Republicans oppose the notion that Climate Change even exits! Well to use the President of the Australian Solar Council words spoken on 5 June 2014, when politicians resist they will come around to change their thinking easy enough. You could interpret that as – I oppose to recognise because change present problems that require actions. You could also say in ‘yes minister’ style: One will be courageous when it becomes unavoidable. You could say if you reduce the risk, and it is to reduce the likely hood of a voter backlash it is a good thing.

To follow on with the tax argument, we quote: “Instead of listing all the fine things a carbon tax could buy — some tax cuts here, a bit of budget-deficit reduction there, and plenty left over for additional spending on infrastructure and other good things — advocates of such a tax should simply offer to give back all the revenue in the form of tax cuts elsewhere.

It’s a worthwhile trade because a tax is by far the best way to reduce carbon emissions, which again is the whole point of this exercise. Consider a modest tax of $16 a ton of carbon dioxide, rising at 4 percent a year above inflation. It would reduce power-sector emissions by more than the EPA proposals for the energy sector would, and curb emissions across the rest of the economy as well.

A $16 a ton tax would also add about 16 cents to the price of a gallon of gasoline and raise household energy costs by 5 percent to 20 percent, depending on the source. Such costs — to “families and businesses,” of course, because what politician in his right mind wants to impose a new tax on families and businesses? — are most often cited by opponents of the tax.

The answer is twofold. Yes, families and businesses would be paying a new tax. But no, families and businesses would not be paying more tax. The new carbon tax would raise about $1 trillion over 10 years and almost $3 trillion over 20 — a handy sum. That would be enough to send every U.S. resident a check for about $300 in the first year (with bigger checks to follow) or $1,200 for a family of four. It would be more than enough to cut the corporate tax rate to 28 percent from 35 percent, for instance, or take a bite out of payroll taxes, or some of both.

This would inevitably lead to an argument over which taxes to cut. At which point, admittedly, the debate could bog down all over again. But at least it would be framed by a shared assumption: that a carbon tax is good policy. It gets liberals a more effective climate policy, and Republicans a less intrusive government.

To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net.”

Now back in Australia, eh what was the problem? I guess we have an issue with setting our priorities – we prefer to impress bar flies!

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