Carbon Tax vs. Cap and Trade

Coyote, December 2007:

I can for a moment place myself in a position where I would imagine being worried about CO2 and dependence on fossil fuels.  For someone who really cares about these things, here is what a rational energy plan would look like:

  1. large federal carbon tax, offset by reduction in income and/or payroll taxes
  2. streamlined program for licensing new nuclear reactors
  3. get out of the way

Ronald Bailey, today:

Interestingly, Sen. Bob Corker (R-Tenn.) suggested to Gore during the hearing that a better proposal would be to impose an across-the-board carbon tax which would then be reimbursed entirely by cutting the payroll tax.

He has much more on problems of cap and trade in the article.  I have written many times on a carbon tax vs. cap-and-trade, indexed here.


  1. Lorenzo:

    The Bailey link is not working

  2. macquechoux:

    "...across-the-board carbon tax which would then be reimbursed entirely by cutting the payroll tax."

    Let's take a look at that. If I am a fireman, cop, or teacher with a wife that works too, live in New York City in a 950 sq. ft. apartment with units above, below and on each side of me I am going to come out like a bandit! Gosh, if you are retired and happen to live in an area served by a public utility that generates most of it's electricity by coal or petroleum coke; well, I guess you are screwed. I'm gonna start looking for a job for my 92 year old mother, right after I find one for myself. Damn, I though I was retired.

  3. Xmas:


    Yes. At least for a little while. A cap-and-trade program would probably have the same result. Pretty much any program to reduce carbon emissions is going to go after those that have the most carbon emissions.

    If they phase it in slowly, I think you'll see less of a mess.

    Hmm...Carbon taxes are the ultimate in consumption taxes. My libertarian antennae are twitching...It'll be like a VAT.

  4. macquechoux:

    Xmas, why would it be only for "a little while?" What's gonna change? Also notice the carbon tax isn't going to replace payroll taxes it will reduce them.

  5. Mesa Econoguy:

    How about:

    1) large fed carbon tax, with

    a) deductions for adopting free-market (non-subsidized) solutions
    b) deductions for abolition of the CO2-producing technology altogether

    2) construction of new nuclear plants (via Obamarama’s plan), and;

    3) power grid infrastructure reinforcement, in conjunction with clean coal backup pp construction, with same technology

    See? This is precisely why this will fail, &/or become another HUD/EPA/every other well-intentioned disaster. Conflicting goals/directives.

    Cap and Trade is an even larger fiasco waiting to happen…..