Now that the U.S. has a new abundance of domestic oil and natural gas, what could be more natural than to tax it? As Ronald Reagan sarcastically summed up traditional government policies, “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
Thus, five Republican elder statesmen calling themselves the Climate Leadership Council have issued a call to their party to support a carbon tax, though most Republicans in Congress, and their new president, are still very skeptical of anything involving a new tax.
Fully aware of the Republican allergy to taxes, the new carbon-tax planners propose paying all of its revenue back to the people. This may sound like the exercise wheel in a squirrel cage, but hear them out. …
… This tax would drive up the price of those fuels for intermediate users such as utilities, refiners, transporters, and manufacturers. The cost would be passed on to consumers in the form of higher prices. In the longer run, consumers would face an incentive to reduce their use of fossil fuels.
In the short run, consumers would scream about the high cost of everything, so the plan calls for returning all of the carbon-tax revenue to consumers and to fossil-fuel exporters.
From the starting rate of $40 a ton, the tax rate would be adjusted up to achieve the same reductions in carbon emissions that current restrictive regulations, including the Obama administration’s Clean Power Plan, might have achieved. The regulations would then be eliminated, according to the proposal.
The five big names in the Climate Leadership Council are former Treasury secretaries James Baker, Henry Paulson, and George Shultz, and former chairmen of the Council of Economic Advisers Martin Feldstein and Gregory Mankiw.