January 9, 2015 3:36PM

You Ought to Have A Look: Carbon Tax, Carbon Tax, Carbon Tax

You Ought to Have a Look is a feature from the Center for the Study of Science posted by Patrick J. Michaels and Paul C. (“Chip”) Knappenberger. While this section will feature all of the areas of interest that we are emphasizing, the prominence of the climate issue is driving a tremendous amount of web traffic. Here we post a few of the best in recent days, along with our color commentary.


As you may have guessed from the title of this post, this week we call attention to a few articles around the web examining the common sense behind a tax on carbon. It turns out there is none.

From time to time, there is a pitch made to conservatives that a “revenue neutral” carbon tax would be a win-win for everyone. It would help mitigate climate change while at the same time spur economic activity. Even if you don’t care about the former, you’re bound to like the latter. Or vice versa.

To try to win some new carbon tax recruits in the incoming Republican-led Congress, two recent high profile articles—one in the Washington Post by one-time Obama economic adviser Larry Summer and the other on National Review Online by the Hudson Institute’s Irwin Stelzer—make that argument, with embellishments.

If a carbon tax sounds too good to be true, then your intuition is correct.

Robert Murphy, an economist for the Institute for Energy Research, provides the technical details, collected from the economic literature, as to why the economic gains don’t actually come along with a carbon tax as they are being promised. In his National Review Online article “Taxing Carbon Won’t Help the Economy,” Murphy rebuts many of Stelzer’s claims. Ultimately, he delivers this sage advice:

Far from offering something for everyone, a revenue-neutral carbon tax advances the policy agenda of the environmental Left at the expense of the American people. The economic theory of a carbon tax is unmoored from political reality. In practice, carbon-tax supporters have shown that they would rather spend the revenue on pet projects than reduce taxes, thereby hindering economic growth. Conservatives should resist the temptation to give central planners in Washington more money to waste and more control over our economic affairs.

Another take on the carbon tax is offered by our good friend, the always insightful Marlo Lewis, from the Competitive Enterprise Institute. Marlo takes on Summers’ “Oil Swoon Creates the Opening for a Carbon Tax” with his own “Oil ‘Swoon’ Is Not an Argument for Carbon Taxes” over at the blog for Globalwarming.org.

Marlo leads off with this bit of depressing (yet predictable) news,

It was inevitable. As soon as consumers and the economy start to enjoy significant relief from a decade of pain at the pump, the political class clamors for higher gas taxes and new carbon taxes.

Marlo then takes us through the long list of supposed “benefits” of a carbon tax, tearing each one down along the way. From “Is carbon energy a tax haven?” to “Do we overuse fossil fuels?” to “Would a carbon tax make energy markets more efficient?” Marlo’s answer is always the same, “No.”  He summarizes:

Summers makes a clear, concise, but unpersuasive case for a carbon tax. The holes in the argument are not his doing but rather arise from the thesis he propounds. The case for a carbon tax fails because:

  • American energy is not undertaxed or under-regulated.
  • An underperforming economy and anti-market policies already restrict oil consumption.
  • Policymakers do not know the sign (positive or negative), much less the monetary impact, of an incremental ton of CO2, so even a small carbon tax could do more harm than good.
  • Carbon taxes are regressive and would be piled on top of existing taxes and regulations rather than replace them.
  • Even a very aggressive carbon tax imposing trillion-dollar costs on the economy would have no discernible climate impact for decades to come.
  • Consumers are finally getting a break from high gasoline prices. Having endured years of energy-price windfall losses, they should now be allowed to enjoy windfall gains.

Also adding to the anti-carbon tax sentiment is Heritage Foundation economist Nicolas Loris. Loris highlights the results of an economic analysis of a carbon tax that the Heritage Foundation recently conducted. According to Loris:

Using the same model as the Energy Information Administration, we modeled what a carbon tax equivalent to the federal government’s social cost of carbon estimate would do to the economy between 2015 and 2030 and found:

  • An average employment shortfall of nearly 300,000 jobs,
  • A peak employment shortfall of more than 1 million jobs,
  • 500,000 jobs lost in manufacturing,
  • Destruction of more than 45 percent of coal-mining jobs,
  • An aggregate GDP loss of more than $2.5 trillion (inflation-adjusted), and
  • A total income loss of more than $7,000 per person

Loris has this most useful suggestion:

Here’s a better deal: Let’s cut the taxes we don’t like and in turn everyone will get more economic growth, more jobs with higher wages and a better standard of living for all Americans. Such a policy will provide the world with more wealth and resources to tackle the problems of the future, whether they’re climate-related or not.

These are three good counters to arguments for a carbon tax that everyone should be familiar with. So, to stay in the know, you ought to have a look!