Heartland Ideas

Carbon Tax

March 08, 2013, 1:27 PM
March 11, 2013, 9:19 AM

Enacting a carbon tax, with or without promises to offset the tax burden by reducing other taxes, is a bad idea for the following reasons:

Carbon taxes are job killers. Energy cost is tightly correlated with economic growth, and any increase in the price of energy has negative impacts on job creation, per-capita income, and growth in GDP. Since 80 percent of energy consumed in America comes from fossil fuels, a carbon tax would raise energy costs across the board, hurting every industry and every consumer.

Promises of revenue neutrality will be broken. Reductions in other taxes or programs to rebate to consumers the revenue generated by a carbon tax will almost certainly be temporary, while the new tax rate will rise over time. Promises to cut taxes are rarely kept and are never binding on future legislatures. Accordingly, a newly imposed carbon tax will be revenue neutral only for a short time, and then become a source of rapidly rising tax revenues.

Carbon is already taxed high enough. Americans in every state except Alaska already pay a combined federal and state gasoline tax that is higher than a carbon tax would need to be set at to pay for the negative effects of carbon dioxide produced by their cars and trucks. Opinion polls show the American public are adamantly opposed to paying higher taxes in the name of battling “global warming.” (Diesel and gasoline account for about 29% of total U.S. greenhouse gas emissions.)

Higher carbon taxes cause environmental harm. Carbon taxes force the substitution of wind and solar power for fossil fuels, but these alternative energy sources cause real and substantial environmental damage. Wind turbines, while providing merely 2 percent of U.S. electricity, kill at least 440,000 birds each year, including many endangered species, according to the U.S. Fish and Wildlife Service. Wind power kills a similar number of bats and requires the development of vast areas of pristine land. Solar thermal power is similarly land-intensive and utilizes substantially more water than coal and natural gas power.

Reducing carbon dioxide concentrations in the air causes environmental harm. Plant growth is limited by the amount of carbon dioxide in the air, and the modest increase in atmospheric carbon dioxide during the past century helped make possible record crop production and the expansion of plant life throughout the planet. Reductions in atmospheric carbon dioxide would cause a reduction in crop production, plant growth, and biosphere richness.

Reducing carbon dioxide emissions is unnecessary for three reasons:

U.S. carbon dioxide emissions already are declining. U.S. carbon dioxide emissions are lower than they were at the turn of the century. This decline is accelerating as low-cost natural gas, made possible by the shale gas revolution, induces utilities to replace high-carbon coal power with lower-carbon natural gas power. Other market factors also are inducing a long-term decline in carbon intensity, and no new taxes are necessary to continue this trend.

Reducing U.S. emissions won’t stop or delay climate change. While U.S. carbon dioxide emissions already are falling, emissions in India, China, and other developing countries are rising rapidly, causing global emissions to rise regardless of what we do in the U.S. In fact, increasing energy costs in the U.S. would simply drive manufacturing (and jobs) to India and China, where energy costs are lower and carbon dioxide emissions per-unit of output are higher.

Global warming fears are overstated. Real-world temperatures continue to rise much more slowly than predicted by global warming advocates, and real-world weather and climate data reflect few if any of the predicted negative consequences of global warming.

Search The Heartland Institute’s database of research and articles on carbon taxes at PolicyBot.

The following documents offer additional information on carbon taxes.

Dissecting the Carbon Tax
American Enterprise Institute Resident Scholar Kenneth Greene tells how he was first deceived by the supposed economic benefits of carbon taxes and how his views have evolved in light of the dubious track record of other eco-taxes being raided for general spending. 

Inside the Strange World of “Green Energy” Politics and How it’s Ruining the U.S.
Manhattan Institute Senior Fellow Robert Bryce recounts how the shale gas revolution and the power of market forces have lowered U.S. greenhouse gas emissions far more quickly and cheaply than expensive and burdensome mandates, taxes, and cap-and-trade schemes could do. 

Kansas Legislature Was Wise to Reject Carbon Tax
Writing in the Heartlander digital magazine, Cato Institute Senior Fellow Patrick Michaels discusses a Kansas state bill on carbon dioxide emissions. If the bill’s costly provisions were applied to every country in the world that signed the 1997 Kyoto Protocol, the law would prevent 0.27 º F of warming per century, a figure too small to even measure, Michaels reports. 

A Primer on the Economics of Carbon Taxes and Cap-and-Trade Systems
Economist and Heartland Institute Board Member Jim Johnston analyzes the pros and cons of the two most prominent government proposals to combat carbon dioxide emissions: cap-and-trade schemes and carbon taxes. 

White Paper on Global Climate Change
In a 38-page white paper on global climate change, Heartland President Joseph Bast devotes considerable discussion to the inherent shortcomings of a carbon tax, including the improbability that a politically determined tax level would achieve significant carbon dioxide reductions and internalize the unknown costs to society posed by CO2 emissions. 

Global Carbon Dioxide Emissions Increase by 1.0 Gt in 2011 to Record High
The International Energy Agency releases key findings from its signature report, World Energy Outlook 2011, including the United States’ world-leading reduction in carbon emissions failing to prevent a record high in global carbon emissions from fossil-fuel combustion.

On December 12, 2012, fourteen conservative think tanks and advocacy groups joined forces to urge Congress to oppose carbon taxes. The open letter, which was released and delivered to members of Congress, can be found here.

The following groups signed that letter:

The Heartland Institute
The American Conservative Union
Americans for Limited Government 
Caesar Rodney Institute 
John Locke Foundation 
Cascade Policy Institute 
Tennessee Tax Revolt
Nashville Tea Party 
Maryland Taxpayers Association
American Tradition Partnership
Freedom Action
Competitive Enterprise Institute
The Liberty21 Institute
The Cherokee Tea Party Patriots

The following think tanks, experts, business groups, and organizations have also expressed opposition to implementing carbon taxes:

Heritage Foundation
American’s For Prosperity
National Association of Manufacturers
Republican Study Committee
American Energy Alliance
Institute for Energy Research
American Commitment
George C. Marshall Institute
Center for Freedom and Prosperity
National Center for Public Policy Research
Heritage Action for America
Citizens Against Government Waste
Americans for Tax ReformCato Institute
Independent Women's ForumFrontiers of Freedom