Once people get an idea of how much a ‘carbon tax’ will cost, they oppose it

“The bottom line with any carbon tax,” wrote Roy Cordato, “is that it will enhance the wealth of big energy companies, decrease economic growth, and negatively impact the wellbeing of all energy consumers while particularly harming the poor. And all this while having no impact on global temperatures.”

New research suggests that (despite being favored by environmentalists as well as certain conservatives happy to find a climate virtue signal of their very own) a “carbon tax” would fail at the polls in every state, just as it has twice in Washington state.

Here’s the abstract from the National Bureau of Economic Research paper by Soren T. Anderson (Michigan State), Ioana Elena Marinescu (University of Pennsylvania), and Boris Shor (University of Houston):

Surveys show majority U.S. support for a carbon tax. Yet none has been adopted. Why? We study two failed carbon tax initiatives in Washington State in 2016 and 2018. Using a difference-in-differences approach, we show that Washington’s real-world campaigns reduced support by 20 percentage points. Resistance to higher energy prices explains opposition to these policies in the average precinct, while ideology explains 90% of the variation in votes across precincts. Conservatives preferred the 2016 revenue-neutral policy, while liberals preferred the 2018 green-spending policy. Yet we forecast both initiatives would fail in other states, demonstrating that surveys are overly optimistic.

What’s going on there? I suggest it’s the difference between stated preference and revealed preference, and it’s a difference we see often in polls about environmental policies.

It is easy to tell a pollster you favor something when its costs and benefits are both hypothetical. At that point, you’re essentially being asked if you support the goal. When the goal with hypothetical costs and benefits is saving the planet, well, that sounds nice.

It’s a different thing altogether when the benefits are still speculative, while costs are more immediate. (I.e., “real-world.”) And energy costs are particular impactful, especially against the poor:

The underlying issue is that everyone, rich or poor, needs energy.

It is a basic human need, so anything that makes it more expensive will disproportionately harm the poor more. (And anything that makes it less costly will disproportionately help the poor.)

Draw the right lesson, though

The lessons to draw from this should be obvious: Don’t create a tax out of thin air. Don’t raise energy costs on poor consumers. Don’t try to prop up nondispatchable renewable sources of electricity by running to government to hike costs on dispatchable, competing sources. Let technological innovation and competition in energy markets continue (yes: continue) to keep America leading the world in reducing energy-based emissions).

Unfortunately, I fear that the “carbon tax” advocates on the left and right will think the research means imposing it by going around voters with a raw exercise of political power. They’ll hide behind the polls, of course. But it won’t make the costs any less real, while the benefits remain speculative.

Cartoon aside, we wouldn’t even get the T-shirt.

Jon Sanders / Director of Regulatory Studies

Jon Sanders studies regulatory policy, a veritable kudzu of invasive government and unintended consequences. As director of regulatory studies at the John Locke Foundation, Jo...

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