"The Strange Persistence of Carbon Tax Advocates"
It’s hard to know what’s going on in the heads of people who think that we could solve our problems if only environmentalists would ditch cap-and-trade in favor of a carbon tax scheme. Their basic point, that the kind of carbon tax proposal that policy wonks would dream up would be superior policy to the kind of cap-and-trade plan that would result from the compromises necessary to get 60 votes in the Senate, is very true. But by the same token, the kind of cap-and-trade proposal that policy wonks would dream up would be superior policy to the kind of carbon tax plan that would result from the compromises necessary to get 60 votes in the Senate.
People really should, my view, spend more time worrying about why it is that the U.S. legislative process involves doing such violence to policy proposals from a technocratic point of view. This is a big problem, and one that it would probably possible to ameliorate (though not eliminate) through procedural reforms.
But it is what it is. Switching the initial proposal around doesn’t change the basic realities. And that’s especially true because the initial proposals are actually extremely similar. On the one hand, you could tax people who emit carbon dioxide. On the other hand, you could sell permits to people who want to emit carbon dioxide. There’s a difference between these proposals, but it’s a very small difference. Once the sausage gets made, you wind up with a cap-and-trade plan that looks pretty different from that, but that’s because of the sausage-making process not because of any intrinsic features of the legislative proposal. Anyone who thinks a carbon tax would necessarily be simple ought to spend an afternoon looking into the corporate income tax.