Taxes

A Republican Carbon Tax?

Rep. Carlos Curbelo (R-FL) introduced legislation and conservatives are rallying against it.

Lewis Morris · Jul. 25, 2018

Rep. Carlos Curbelo (R-FL) introduced legislation to implement a carbon tax in the House Monday. It would impose a $24-per-ton tax on energy companies’ carbon dioxide emissions and would rise 2% annually above inflation. As an offset, the bill would also repeal federal taxes on gasoline, diesel, and aviation fuels.

The bill includes directives on how the tax revenue would be spent, including infrastructure spending on projects to protect against climate change, such as flood mitigation. Ten percent would be set aside for grants to low-income households to cover rising energy expenses, and 70% would be put into the Highway Trust Fund.

The tax swap that would supposedly shift the energy tax burden from energy consumers to energy producers is what Curbelo and supporters of the bill probably believe makes it a game changer for America’s energy policy. Conservatives wasted no time reminding him how wrong he is.

“Carbon doesn’t pay taxes — families pay taxes, people pay taxes, taxpayers pay taxes,” said Grover Norquist, president of Americans for Tax Reform. “This is just the most recent effort by the left to find a way to get into your pockets.”

Simply removing the federal gas tax will not ease the energy tax burden on consumers. For starters, energy companies will never simply eat the higher cost of a direct tax on carbon emissions. The higher taxes they pay will trickle back down to consumers in the form of higher energy costs. Curbelo even admits this by setting aside some of the tax revenue for low-income households to pay inevitably higher energy bills.

Second, it is virtually assured that the federal gas tax will return at some point, if it’s eliminated at all. The government rarely turns down an opportunity to tax. Politicians sometimes even lump taxes on top of other taxes and call it a surcharge. The new taxes are always labeled as temporary, but that is a relative term. When normal people use the word temporary, they are referring to weeks or months. When politicians use the word temporary about a tax, well, let’s just say we’re reminded of Ronald Reagan’s adage — “A government bureau is the nearest thing to eternal life we’ll ever see on this earth.”

The only thing that will truly be temporary is Curbelo’s repeal of the gas tax. Republicans won’t be in control of Congress forever. You can be certain that one of the first things Democrats will do after regaining control of the House, whenever that may be, would be to reintroduce the gas tax to raise revenue to power their spending addiction.

There’s another worrisome provision in the legislation, too. Reason’s Eric Boehm reports, “Buried inside a carbon tax plan unveiled Monday by a Florida Republican is a plan to create a National Climate Commission and give it virtually unlimited access to government data on American businesses.” What could go wrong?

Supporters of Curbelo’s bill gloss over these points to drum up interest. Josiah Neeley, energy policy director of the R Street Institute, points out that the tax swap “is a standard part of the GOP tax playbook going back to 1986.” Ah, when all else fails, play the Reagan card.

One good thing that the bill does introduce is a restriction on the EPA’s ability to regulate greenhouse gases. “That may not seem like a pressing thing right now because Trump is not pursuing climate change regulations,” Neeley points out, “But over time, that authority will come back into play.” But again, the staying power of such an initiative is dependent on which party is in power. A Democrat president and Congress could easily reverse this restriction.

Curbelo’s bill has landed with a thud among Republicans who claim that the carbon tax would harm the economy. Last week, the GOP backed a resolution declaring just that point. Columbia University’s Center on Global Energy Policy issued a study finding that Curbelo’s bill would have no noticeable or lasting impact on the economy. Considering that Columbia University is in the tank with the manmade global warming crowd, these results should come as no surprise.

Curbelo’s bill is supposedly designed to help combat global warming, but raising taxes does not change the weather. As a Republican, Curbelo should know better. But he is in a tough district in a politically combative coastal state, and he’s trying to save his job. The trouble is, if voters want to elect a Democrat, they will go for the real thing, not a Republican trying to act like one.

As for America’s contribution to global warming, our free-market policies are doing just fine in that department. The U.S. has made more progress in reducing its carbon footprint than any of the other signers of the Paris Climate Accord. In fact, the U.S. is just about the only country that is seeing a reduction in its carbon emissions at all. America’s carbon emissions have dropped for three consecutive years, and 2017 was the ninth year in the past 18 in which America had the largest decline among the world’s carbon producers.

The rest of the world, which makes a habit of shaking the dirty end of the stick at America, saw emissions rise by 21%, with China and India being the heavyweight carbon emission producers.

With results like this, why would we change what’s working?

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