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Carbon tax could be solution to climate issue

February 19th, 2013

Polar ice caps melting, rising sea levels, the Maldives disappearing and monstrous hurricanes are just some of the effects of climate change. What to do about climate change or what causes it have largely been a partisan issue. However, James Hansen, an expert climatologist from NASA, may have the answer for a partisan-driven Washington – a carbon tax.

The concept is simple. A flat tax on carbon is levied on the initial sale of the fossil fuel at the point of sale to a refinery. The revenue generated is pooled and distributed equally to all Americans.  Assuming a tax of $37 per ton and 300 million Americans, the tax would generate an annual “green check” of approximately $183 per person, as indicated by the website carbontax.org.

With the money generated by the tax being redistributed to the people, the tax is revenue neutral. However, the tax would increase the price of fossil fuels at the pump, creating incentives for people to reduce energy consumption and to seek alternative fuels.

This may be the best solution for a partisan-driven Washington. While conservatives are unlikely to support any tax, a revenue neutral tax may be an anomaly because it does not target wealth.The website carbontax.org explains some of this information. Bill Gates could make off of the tax if he reduced his carbon footprint enough.

Liberals might recoil at first glance given the flat nature of the tax, but because the consumer costs are driven by how much carbon they consume, the effect of the tax is far more progressive than regressive. Both parties may favor a tax at the barrel since this system allows the consumer to decide the effects of taxation.

If they wish to buy three trucks and drive prolifically, they can. However, environmentally conscious citizens who buy hybrid cars and conserve energy will pay far less and may actually profit given their “green checks.”   The result is an effective, but far less controversial policy, as indicated by carbontax.org.

The revenue neutral carbon tax offers an expedient solution. There are no loopholes companies can exploit as they do with cap-and-trade options or our existing system.   There are no questions about businesses going over a “cap” on carbon dioxide emissions or companies creating fake businesses to “sell” their share of emissions to larger businesses.

The catastrophic effects of warming necessitate action. The simplicity, feasibility and neutrality of a carbon tax may be an effective yet less controversial approach to addressing climate change, according to carbontax.org. Nevertheless, it remains unclear how this would play out.

Information from carbontax.org was used in this report.