The Carbon Tax Fantasy
Every time a reporter asks me if I would support a carbon tax, I always say that I might if it led to a dollar-for-dollar reduction in income or payroll tax rates. And the new energy tax would have to replace onerous greenhouse gas regulations. And every time I say this, the next day a headline reads, “Steve Moore Is for a Carbon Tax.”
E&E News did it again two weeks ago, writing Stephen Moore says, “yes to carbon tax.”
This is Fake News 101. What the story left out was my prediction that the chances of the left agreeing to the carbon tax deal I have in mind range from zero to microscopic.
I live in the real world, not in the dreamy ivory towers of academia. We will wind up with costly taxes and regulations.
There is, of course, another practical and insurmountable problem with a U.S. carbon tax to stop climate change. Any American levy against our coal, oil, gas and transportation industries would do virtually nothing to reduce global carbon emissions. Some of these schemes would institute a tax on imported energy, but this would necessitate a new international tariff regime, bigger government and lower living standards, particularly for the poor. I thought economists were for freer trade: They sure have been critical of Trump trade policies.
But even a tariff wouldn’t prevent China, India, Pakistan, Brazil, Vietnam and Africa from emitting mass amounts of carbon into the atmosphere for their own consumption, which would swamp the effect of any realistic American greenhouse gas reductions. Virtually none of the nations that are major polluters have come anywhere near their carbon emission promises under the Paris Agreement. China is massively increasing its emissions. How does it save the planet if we shut down a coal plant but China, India, et al. builds four or five new ones? No one benefits, and the coal workers in Ohio and West Virginia get clobbered. No deal.
Nor will an energy tax be coupled with a reduction in income tax rates. The left is adamant that it will spend any new dollars on its own corporate welfare green energy programs. Just ask the author of the Green New Deal — Rep. Alexandria Ocasio-Cortez. The carbon tax funds “Medicare for All,” electric vehicles, mass transit and guaranteed national income.
This is a lose-lose for American prosperity. The energy experts at The Heritage Foundation have crunched the numbers and found that “by 2030, with a $37 per ton carbon tax, the country would experience an aggregate gross domestic product loss of more than $2.5 trillion — or more than $21,000 in income loss per family.” Oh, and about 1 million jobs would vanish, half from manufacturing. The shale energy revolution that has rebuilt the economies in states like Alaska, North Dakota, Ohio, Oklahoma, Pennsylvania, Texas and West Virginia would come to a screeching halt.
All of this is unnecessary. If the climate change warnings of the alarmists turn out to be true, we will use technology and innovation to combat weather changes — not steel-booted world-government mandates and edicts. This requires more economic growth so the private sector has the funds to finance these initiatives. Any climate change “solution” that makes America poorer — such as a massive tax increase — is no solution at all.
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