The Conservative Case for a Carbon Tax and Dividends

Editor's note: This column is an excerpt of a report by the Climate Leadership Council outlining a policy proposal. The full report is here. Mounting evidence of climate change is growing too strong to ignore. While the extent to which climate change is due to man-made causes can be questioned, the risks associated with future warming are too big and should be hedged. At least we need an insurance policy. For too long, many Republicans have looked the other way, forfeiting the policy initiative to those who favor growth-inhibiting command-and-control regulations, and fostering a needless climate divide between the GOP and the scientific, business, military, religious, civic and international mainstream. Now that the Republican Party controls the White House and Congress, it has the opportunity and responsibility to promote a climate plan that showcases the full power of enduring conservative convictions. Any climate solution should be based on sound economic analysis and embody the principles of free markets and limited government. As this paper argues, such a plan could strengthen our economy, benefit working-class Americans, reduce regulations, protect our natural heritage and consolidate a new era of Republican leadership. These benefits accrue regardless of one's views on climate science.The four pillars of a carbon dividends plan1. The first pillar is a gradually increasing tax on carbon dioxide emissions to be implemented at the refinery or the first point where fossil fuels enter the economy, meaning the mine, well or port. Economists are nearly unanimous in their belief that a carbon tax is the most efficient and effective way to reduce carbon emissions. A sensible carbon tax might begin at $40 a ton and increase steadily over time, sending a powerful signal to businesses and consumers, while generating revenue to reward Americans for decreasing their collective carbon footprint.2. All the proceeds from this carbon tax would be returned to the American people on an equal and quarterly basis via dividend checks, direct deposits or contributions to their individual retirement accounts. In the example above, a family of four would receive approximately $2,000 in carbon dividend payments in the first year. This amount would grow over time as the carbon tax rate increases, creating a positive feedback loop: the more the climate is protected, the greater the individual dividend payments to all Americans. The Social Security Administration should administer this program, with eligibility for dividends based on a valid social security number.3. Border adjustments for the carbon content of both imports and exports would protect American competitiveness and punish free-riding by other nations, encouraging them to adopt carbon dioxide pricing of their own. Exports to countries without comparable carbon pricing systems would receive rebates for carbon taxes paid, while imports from such countries would face fees on the carbon content of their products. Proceeds from such fees would benefit the American people in the form of larger carbon dividends. Other trade remedies could also be used to encourage our trading partners to adopt comparable carbon pricing4. Eliminate regulations that are no longer necessary upon the enactment of a rising carbon tax whose longevity is secured by the popularity of dividends. Much of the Environmental Protection Agency's regulatory authority over carbon dioxide emissions would be phased out, including an outright repeal of the Clean Power Plan. Robust carbon taxes would also make possible an end to federal and state tort liability for emitters. To build and sustain a bipartisan consensus for a regulatory rollback of this magnitude, the initial carbon tax rate should be set to exceed the emissions reductions of current regulations.Members of the Climate Leadership Council are: James A. Baker, former secretary of state under President George H.W. Bush.Martin Feldstein, former Chairman of the President's Council of Economic Advisers under Ronald Reagan and economics professor at Harvard University.Ted Halstead, chief executive of the Climate Leadership Council.N. Gregory Mankiw, chairman of the President's Council of Economic Advisers under President George W. Bush and economics professor at Harvard University.Henry M. Paulson, former secretary of the Treasury under President George W. Bush. George P. Shultz, former secretary of state under President Ronald Reagan and secretary of Treasury and Labor under President Richard Nixon. Thomas Stephenson, a partner at Sequoia Capital.Rob Walton, chairman Walmart. Website:  Continue reading...

Copyright The Dallas Morning News
Contact Us