This morning, the Washington Post editorial board again called for a carbon tax with the piece “Carbon tax is the best option Congress has.” It’s the second time in the last two months (and fourth in the past six months) the Post has called for this tax, which has the potential to hurt jobs and our economy. It’s a surprising amount of attention for a concept that has little to no political legs in Congress.
Congress isn’t talking about a carbon tax because when a cap-and-trade bill like Waxman-Markey is labeled a “job-killing energy tax” and can’t win support in the Senate, it’s hard to get behind a bill that would impose an actual energy tax.
Also, a carbon tax does not appear to be the economic or environmental panacea the Post is making it out to be. A recent economic study for the NAM conducted by the nonpartisan NERA Economic Consulting looked at two carbon tax scenarios: one levied at $20 per ton increasing at 4 percent, and the other designed to reduce carbon dioxide (CO2) emissions by 80 percent. In both cases, any revenue raised by the carbon tax would be far outweighed by the negative impact to the overall economy.
Both cases would hurt families and businesses, resulting in higher prices for natural gas, electricity, gasoline and other energy commodities. The $20/ton case reduces U.S. CO2 emissions by only about 30 percent, a much smaller amount than was called for in Waxman-Markey and by leading climate advocates. To get to the levels they are seeking, 80 percent reductions by 2050, the economic costs skyrocket. (continue reading…)