Tax Carbon, Not Wealth

[flwyd]

The Boulder Daily Camera published my letter to the editor about why a carbon tax would be more effective than a wealth tax at fighting climate change, in response to an opinion piece published last week.

Tom Mayer’s call for a wealth tax rightly points out that the wealthiest 10% of the population step with a disproportionately large carbon footprint, and justly calls for those who contribute most to climate change to pay a large share of the bill to fix the problem. As a well-to-do and climate-concerned Boulderite, I’d be happy to pay a higher tax to cover my share of excess pollution. But there’s a more effective way to do it than a wealth tax.

A wealth tax would take the same 2% from the owner of a solar panel company as it takes from the owner of a coal mine. A wealth tax would value a $5,000 car the same as a $5,000 bicycle. And a wealth tax wouldn’t see a dollar from someone who spends all their money on international flights, because money spent on consumption doesn’t accumulate as wealth. In other words, a wealth tax doesn’t reward people for reducing their climate impact, just for owning assets, no matter how clean or dirty.

A carbon tax would make the biggest climate polluters pay the biggest price while simultaneously creating an incentive to reduce carbon emissions and thereby save money. The folks who make their money from fossil fuels will be on the hook for the damage they cause while entrepreneurs leading the clean energy transition will see a reward. An electric bicycle will become a better investment than a gas-powered car, and carbon-intensive products will be more expensive than sustainably built ones.

The wealthy have bags of tricks to hide wealth to avoid tax. A carbon pollution fee at the mine or well would be easy to enforce and reward people for doing the right thing by reducing emissions.

Comments

[willow_red]

What a surprise to see your name while scrolling through the Daily Camera this morning!

I agree with you in principle (though I still support a wealth tax to pay for social programs) with one caveat: there needs to be an exemption or rebate system for low-income people. Many of the changes required to lower a carbon footprint are much more expensive than the conventional options (this is problematic on its own). Without that modification, a carbon tax would serve to deepen existing inequalities in our society, which I’m sure is not your objective.

[flwyd]

I completely agree that low-income folks should be protected from the impact of a carbon tax. The 300 word limit on letters to the editor didn't provide space to talk about the dividend side of carbon fee and dividend. All the carbon tax revenue collected by the U.S. would be distributed in equal amounts to each person in America. A study commissioned by CCL in 2020 found that 96% of low-income households would see a net benefit and 3% would see only a minor loss from a carbon fee with revenue returned as dividends. (Caveat: household income was measured by consumption rather than payments, which smooths out some corner cases like wealthy retirees or high-consumption students without a job.)

I also think that a wealth tax may be a good policy, but it should be done to address the problems created by wealth inequality. If it was used to fight climate change, a decrease in wealth inequality would result in less money to solve climate challenges, which isn't a great incentive structure.

[willow_red]

Okay, that’s much more in line with other versions of a carbon tax that I’ve heard of before. FWIW, you have my support!

I’d like to see the proceeds of a carbon tax go toward offsetting the costs of low-carbon options (e.g., public transit, electric conversion of gas appliances, etc.). I have a post on my recent experience with that that I plan to write eventually.

[altamira16]

Well done, friend.