Friday, October 01, 2010

Carbon Tax

A friend pointed me to a blog post about Energy taxes, and asked what a Tea Party response might be. While I am not a Tea Partier, I've followed them a bit, and will give it a shot.

First, the Tea Party would have no philosophical objection to Energy Taxes, provided they are revenue neutral, or revenue negative. In other words, if Carbon tax increases are offset by Income tax reductions, no problem. The issue is not the source of tax revenue, but the amount, and more importantly the spending.

Anyone advocating Carbon Taxes without a reduction in other taxes is essentially advocating that the government receive a larger share of the national income, which may or may not be a good thing, but it has nothing to do with "Green". Some of us feel that the government is too large already, which is why we like to call ourselves "Small Government Conservatives".

It is important to note that understanding that Carbon taxes are a good way to reduce Carbon consumption is an important lesson. It is not clear that the lesson has been completely learned though. If taxing something reduces it, what means an income tax? That we don't like Income? The Friedman article approves of Chinese investment in Battery powered cars. Presumably the entrepreneurs building those businesses will make a good income, as will many of their employees. Do we wish to discourage that? If so then why are we talking about raising taxes on income?

The Left has an even bigger problem with a Carbon tax though: it is quite regressive. What has been noted about food is surely true about Carbon also, it is a bigger proportion of a poor persons budget than a rich one. Rich people may drive bigger cars and fly abroad more often than poor people, but the ratio will still be less, when compared to income.

Green voters who supported Obama and then watched him splurge his political capital on an unpopular Health Care bill while Cap and Trade lies dead in the water may wonder if the Green-Dem alliance is paying dividends. Republicans tend to be interested in security, and eliminating the need for oil imports plays well there. It is a matter of framing the debate, not a matter of policy.

In sum I agree, if you want to be Green, you should think about these things before you vote.