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07 Sep 2007 04:30 pm

Carbon Tax? Or Gas Tax?

A reader writes:

I'm fine with a modestly increasing carbon tax over time, if it's well-structured.  Simply keeping up with gas and oil productivity gains in tax form is long overdue.  However, I think it's worth exploring what the unintended consequences of a carbon tax would be, and to try and take them into account.  For example ... coal - which is still our largest source of electricity - has a much higher carbon footprint than oil does. Therefore, a carbon tax that doesn't take this into account would move us towards more oil, not less.  If "defund[ing] some of our enemies" is a primary goal, then a flat carbon tax is a terrible idea.

I'd phase it in gradually and place the bulk of it on oil for long-term national security reasons. But coal needs to be priced upward too. Look: I'm not a technical expert on these matters. The point is to begin to use taxation to help advance our energy and national security needs. I'm not a fan usually of using the tax code to get preferred results. But this is close to a global emergency; and the only way to get beyond carbon is to give the market real incentives to create new energy technologies.

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