Monday, June 9, 2008

Carbon Tax vs. C&T Redux

James Hansen is apparently advocating a modification of a straight carbon tax, where the proceeds are redistributed to the citizenry based on how energy-efficient they are. John Tierney kinda likes it:
Dr. Hansen and I are not exactly public-policy soulmates, but I’m with him on this one. I’ve advocated a similar tax on carbon generally and gasoline specifically, with all the money refunded directly to citizens, either through simple payments or by depositing the money in new individual retirement accounts. Refunding money directly removes the temptation for Congress to treat a carbon-reduction revenues as a chance to dispense trillions of dollars worth of favors — as proposed in last week’s bill, which was aptly dubbed “pork-and-trade.
This might be a good place to think about what you do with the revenue generated by either a straight tax or by C&T. Both schemes have legislators slavering over a potential new revenue stream and it's essential that that stream be restricted.

Seems to me that there are three broad categories where carbon revenues need to be redistributed:
  • Credits for deployment/adoption of green energy technologies.
  • Foreign aid payments to mitigate the damage done to the growth of developing countries.
  • Green energy research and development expenditures.
Even with these three categories, the opportunities to game the system and rent-seek are myriad. But at least these restrictions would be able to sandblast away the general fund bullseye that's already been painted on the proposed C&T system.

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