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There Is No Revenue-Neutral Carbon-Dioxide Tax

December 4, 2020

Climate Change Weekly #380

Each time politically influential elites propose a tax on carbon dioxide emissions to fight climate change, economists and other analysts demonstrate such a tax will impose far more harm on society than the climate harms the tax is intended to avoid. As a result, Congress has repeatedly rejected attempts to impose a carbon dioxide tax, even passing resolutions putting a majority of the body on record as opposing it. Despite that clear opposition, Joe Biden is raising anew the specter of a carbon dioxide tax.

Biden is a climate change true believer, stating repeatedly human fossil fuel use is undeniably causing catastrophic climate change that poses an “existential threat” to human existence. The names Biden has floated for his Cabinet picks and key appointees, such as Janet Yellen for Treasury Secretary, Anthony Blinken as Secretary of State, and former Secretary of State John Kerry as a special envoy on climate, reflect his commitment to imposing drastic policies to fight climate change.

As with fanatics and zealots throughout history, the fact that data indicate Biden and his prospective appointees are wrong and climate change, though occurring, is not catastrophic, does nothing to dissuade them from their blind faith that anthropogenic climate change must be stopped at all costs. Nor are Biden and his allies—multimillionaires with multiple homes, multiple cars, yachts, and private jets—apparently bothered by the fact their lifestyles don’t reflect their purported fear that large carbon footprints are dooming the world. There is a fundamental disconnect between their professed fear of a climate change disaster and how they live their lives. Climate hypocrisy is the modus operandi of those expected to populate a Biden administration.

The carbon dioxide tax is foremost among the policies Biden and company have embraced to fight climate change. While professing the carbon tax is meant to fight climate change, in reality it is simply another way for elites to accrue more power for themselves, exerting ever-greater control over the lives of the common folk—the hoi polloi, Joe and Jane Sixpack, whom they disdain. After all, these common people, who stubbornly cling to their God, guns, pickup trucks and SUVs, air conditioning, and on-demand electric power, are destroying the planet. Biden and company say, “Trust us. We’re from the government, and we know best how you should live.”

Polls consistently show a majority of the public, although concerned about climate change, oppose paying more for their electricity and gasoline in an effort to fight it. Accordingly, the carbon dioxide tax most often floated by American elites is one which they refer to as revenue-neutral. The problem is, a revenue-neutral carbon tax, like Bigfoot, is a myth. It is as fantastical as dragons, unicorns, and catastrophic human-caused climate change itself.

As my colleague James Taylor has persuasively written, no carbon dioxide tax is revenue-neutral for the households being taxed. A carbon dioxide tax raises the price of coal, natural gas, and gasoline in order to force consumers to purchase more-expensive wind power, solar power, and electric vehicles. Although consumers will spend substantially more money on energy and energy-related bills, the wind and solar industries will pay no carbon dioxide taxes. As Taylor points out, the tax revenue generated by a ‘successful’ carbon dioxide tax—one that significantly reduces carbon dioxide emissions—will decline sharply over time, matching the decline in fossil-fuel use, leaving little money to return to the people. Thus, although government would not receive much revenue to return to consumers from the tax, people will face a dramatic decline in their discretionary household incomes as they are forced to pay substantially more on their energy bills.

Nor will the tax be revenue-neutral for households with workers in the fossil fuel industry or related fields. The idea that all the oil field workers, coal miners, coal and natural gas power plant operators, and those working in chemical and plastics manufacturing will be able to transition to other jobs without a hitch is a myth. Their household incomes will fall sharply in the short term, if not permanently. And even if they could simply snap their fingers and magically switch jobs, the jobs they would be taking installing and servicing solar panels and wind turbines don’t pay as well as the jobs the carbon dioxide tax will destroy.

Nor could any carbon dioxide tax be truly neutral in terms of government revenue.

Even if Congress and the president keep their hands out of the till and refrain from finding creative ways to spend whatever revenue a carbon dioxide tax generates—such as diverting the revenue to politically connected crony capitalists pushing big wind and solar projects, as environmentalists have demanded in past carbon dioxide tax proposals—and returns it through some scheme to those paying the tax, it’s simply a fact a good portion of any revenue generated by the tax will be diverted to the bureaucracies involved in collecting it and disbursing the checks. No government program is cost-free.

As with every other government program, there will be huge operating costs involved in collecting, tracking, auditing, and archiving taxes paid and revenues paid out. New employees will have to be hired, or existing federal workers will have to divert their time from other responsibilities, to account for the carbon dioxide taxes to be paid, ensure they are paid, police the program to prevent cheating and fraud, send out the revenue checks, and handle complaints when disputes arise.

These and other costs will eat up billions of dollars each year. Unless these costs are paid directly out of the carbon dioxide tax revenues—meaning all the revenues will not be returned to taxpayers as promised—then the government will have to impose other taxes or take on additional debt to pay for the program. So much for revenue neutrality.

When Joe Biden and his cronies tell you paying a new tax will be good for you, they are lying. A carbon tax won’t save the Earth, but it will make average people poorer. No kind of creative accounting can change this fact.

—     H. Sterling Burnett

SOURCES: Quartz; Freedom Pub; Heartland Weekly


IN THIS ISSUE …

CALIFORNIA LATINOS REJECT REGRESSIVE CLIMATE POLICIES … ELECTRIC TRANSPORTATION TRANSFORMATION WILL COSTS BILLIONS … MANN ET AL. MISTAKE MODELS FOR REALITY


CALIFORNIA LATINOS REJECT REGRESSIVE CLIMATE POLICIES

California’s increasingly stringent climate policies have sparked a backlash among Latino civil and economic rights organizations, who point out, accurately, the policies are highly regressive and cause serious economic harm to poor and minority communities.

Writing in Forbes, Robert Bryce reports leaders of the Latino community have filed multiple lawsuits in recent years to halt various California climate regulations.

In one lawsuit, The Two Hundred, a coalition of California community leaders and minority advocates working to close the gap between minority and white home and business ownership, sued the California Air Resources Board (CARB), claiming recent climate regulations violate the Fair Employment and Housing Act because they “have a disparate negative impact on minority communities and are discriminatory against minority communities and their members.” The plaintiffs also claim CARB’s climate regulations violate the Federal Housing Act because they make affordable housing unavailable.

Bryce reports the Latino community’s objections have largely been ignored by the state and national media, but changing demographics could cause these concerns to undermine Democrats’ future electoral prospects. Bryce writes,

California has the largest Latino population in the country, … account[ing] for about 40 percent of its population. Latino leaders are objecting to the state’s climate-change rules because they will further exacerbate California’s housing crisis and increase poverty. When accounting for the cost of living, 18.1 percent of the state’s residents are living in poverty and the poverty rate among Latino and Black Americans is roughly twice the rate for whites.

In September, the group United Latinos Vote took out an ad in the Los Angeles Times titled “Open Letter to the Sierra Club.” The signatories write, “Your world is not our world. Yours feels hypocritical and socially divisive and would disproportionately burden those who you claim to support the most.” The letter says policies pushed by the Sierra Club in California, such as bans on natural gas use and internal-combustion vehicles, and attempts to force low-income people onto public transit, harm the Latino community.

“We are people who make tough daily choices about how to drive to work, feed our kids, share a video screen for school, and take our parents to the doctor,” said the letter. “All these things are hard. Your world would make them only harder.”

In addition, the letter says,

Your ideas could allow our rich neighbors in the next town to charge their Teslas and run their air conditioners on hot days, but make it unaffordable to use ours. Your plan sounds like you want us to foot the energy bill for the “green” buildings where you rent office space, while our little businesses go broke with higher energy costs.

SOURCES: Forbes; Los Angeles Times


ELECTRIC TRANSPORTATION TRANSFORMATION WILL COSTS BILLIONS

A new analysis by the Global Warming Policy Foundation estimates it will cost more than $100 billion to transition the United Kingdom’s entire transportation system and vehicle fleet to electric power to reach net zero carbon dioxide emissions from the sector to fight climate change.

The author, Andrew Montford, calculates the capital expenditure required by 2050 to turn over the entire vehicle fleet, build out new electricity generating sources, replace fueling stations with charging stations, and pay for regular battery and vehicle replacement. Montford “estimate[ed] the difference in costs between two hypothetical futures: one in which all private vehicles are [battery powered] and a no-policy alternative, based around internal combustion engine vehicles.”

Montford estimates the capital costs of going all-electric will top £2.1 trillion, the equivalent of £19,000 per household. That is £700 billion pounds more than travelers would spend if no zero-emissions transportation policy is enacted. The ongoing operating costs will be high as well, including the costs of replacing batteries, finding replacement transportation when necessary, and time lost while vehicles charge.

Montford finds the annual operating costs will exceed £107 billion, amounting to an extra £2,825 per household per year, double the cost of keeping a vehicle with an internal combustion engine on the road in the U.K.

SOURCES: Global Warming Policy Foundation


MANN ET AL. MISTAKE MODELS FOR REALITY

New research published in the journal Frontiers in Earth Science shows a recent paper by Michael Mann and others indicating large-scale shifts in ocean circulation have an insignificant impact on climate is dead wrong, an artifact of the assumptions, literature, and models Mann et al. used.

The paper, “Internal Multidecadal and Interdecadal Climate Oscillations: Absence of Evidence Is No Evidence of Absence,” demonstrates, among other failings, Mann and colleagues used inadequate data sets spanning artificially short time periods, in the process ignoring long-term data sets and copious literature on paleoclimate data demonstrating a strong impact of the Pacific Decadal Oscillation and the Atlantic Multidecadal Oscillation (AMO) on climate shifts.

Concerning Mann et al.’s treatment of the AMO, the author finds,

The absence of robust multidecadal AMO oscillations in the control simulations stands in sharp contrast to numerous studies finding the opposite in paleoclimatic data (Kerr, 2000; Gray et al., 2004; Chylek et al., 2011; Lanci and Hirt, 2015). Even with the same … method, [Mann] himself formerly identified robust and significant AMO frequencies in four independent sets of global proxy temperature data (Mann and Park, 1994). The most obvious explanation for the discrepancy is that [model] control runs have little to do with reality (Power et al., 2017). Since it is unclear to wh[at] extent the modeled “internal variability” reflects real conditions, the control simulations cannot be trusted unless their results were validated with paleoclimate data.

The Frontiers in Earth Science paper concludes, contra Mann et al., AMO and PDO do significantly affect global average temperatures and climate.

SOURCES: Frontiers in Earth Science

Author
H. Sterling Burnett, Ph.D., is a Heartland senior fellow on environmental policy and the managing editor of Environment & Climate News.
hsburnett@heartland.org
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