Background. U. S. President Donald J. Trump has called global warming a hoax, and opposes policies that would combat its causes and effects. He has assembled a cabinet whose members, as heads of departments that are relevant to this issue, hold opinions that are consistent with his. They seek to reverse the policies of the Obama administration that mitigate global warming and its harms.
The authors cite U. S. Treasury, Office of Tax Analysis, Working Paper 115, January 2017, as concluding that the dividend would wind up benefiting the bottom 70% of taxpayers, or about 223 million residents. That dividend compensates for having paid the carbon tax. The Working Paper estimates that during the first year the tax would add about $0.36 per gallon of gasoline, for example. This increase pales by comparison to the gyrations of the retail price for gasoline during the past few years.
The authors also find, upon analysis, that the carbon tax and dividend, at the starting value of $40/ton of emissions, would reduce the carbon emissions rate to half the rate from all the regulation-based reduction programs put together by President Obama’s administration.
Citizens Climate Lobby (CCL) is an organization whose principal goal has been to lobby Congress to enact a revenue-neutral plan, essentially identical to the one proposed by the authors of this op-ed. CCL commissioned Regional Economic Models, Inc. (REMI) to analyze the effects of the CCL carbon fee and dividend plan. After running a model, REMI found that after 20 years of operation the program is predicted to provide a) a 50% reduction in the CO2 emission rate, b) about 2.8 million new jobs being created as a result of the stimulating effect of the dividend, and c) 230,000 fewer premature deaths among the population as a result of reductions in air pollution from disease-causing agents.
British Columbia, the Canadian province, has had a very similar regime in operation since 2008. Instead of a direct dividend, British Columbia uses the revenue to abate other classes of taxation, including the corporate tax rate. The effect broadly is comparable to that of a dividend, namely, reinjecting funds back into the provincial economy.
The New York Times reported, on March 1, 2016 that the carbon tax rose from CA$10 in 2008 to CA$30 in 2012 (about US$22.20 in 2016), while emissions fell over that time from 5 to 15% even as there were minimal effects on overall economic activity. The Times stated “a carbon tax is the most efficient, market-friendly instrument available in the quiver against climate change”. The report also quoted Mary Polak, British Columbia’s environment minister, as saying the tax “performed better on all fronts than I think any of us expected”.
It is time for President Trump and the conservative majorities in the U. S. Congress to recognize the reality of global warming and its dangers, and to enact meaningful federal legislation to minimize future emissions.
© 2017 Henry Auer