Killing me loudly

Big Green savages Dingell’s carbon tax 26

"Man always kills the thing he loves," wrote naturalist Aldo Leopold in the environmentalist bible, A Sand County Almanac. Leopold was referring to Americans' destruction of the wilderness, but he could have been describing the green establishment's hostile reaction to the "hybrid carbon tax" proposed by Michigan Rep. John Dingell last month.

Dingell's tax package, combining a carbon-busting tax on fossil fuels, a surtax on gasoline and jet fuel, and a phase-out of subsidies for sprawl homes, should have been greeted by environmentalists like the Second Coming. Extrapolated to 2025, the carbon tax alone would cut annual CO2 emissions by 1.3 billion metric tons (a sixth of current emissions) and curb U.S. oil usage by 2.8 millions barrels a day (mbd). With Dingell's petrol surcharge, the savings swell to nearly 1.6 billion metric tons of CO2 and 4.5 mbd, more than the entire oil output of Iran.

Further savings would come from abolishing the tax-deductibility of mortgage interest on houses larger than 4,200 square feet, a loophole that has underwritten millions of McMansions on America's SUV-crazed exurban fringe. (Smaller houses down to 3,000 square feet would also lose some deductions, on a sliding scale.) Taken as a whole, Dingell's proposal would be a giant step toward what Friends of the Earth terms "decarbonizing the tax code." It would also embody the cardinal sustainability precept that keeps Europe's carbon footprint at half of ours: energy prices must tell the truth, even if it requires taxing fuels.

Alas, with the lone exception of FoE, leading Big Green groups have gone after Dingell's proposed bill like a clear-cutter on crank.

Sierra Club executive director Carl Pope lambasted Dingell for deliberately advancing a strategy "designed to fail" that would torpedo "the most popular mechanism for reducing oil consumption -- tougher fuel economy standards" for automobiles. Greenpeace accused Dingell of spewing "empty rhetoric that keeps the House of Representatives from enacting global warming solutions" such as stronger CAFE standards. To drive home the point, Greenpeace staged a press event in which it converted Dingell's district office parking lot into a mock car dealership selling gas-guzzling "Dingell Destroyers."

The backstory here is Dingell's history of obstructing car fuel-economy standards. As longtime chair or ranking Democrat of the House Energy and Commerce Committee, Dingell has always resisted raising standards or extending them to SUVs and pickups. Nor has the diabolically crafty Dingell helped his credibility as a carbon taxer with repeated warnings that "the American people [aren't] willing to pay" what it will really cost to stop disastrous climate change.

Still, the Sierra Club et al. ought to be able to distinguish the message from the messenger, and even if Dingell is a flawed, albeit powerful, messenger, carbon-busting tax reform is certainly the right message. But strangely, the green establishment is so wedded to CAFE that it has blinded itself to the far greater power of Dingell's carbon tax.

As estimated by the authoritative American Council for an Energy-Efficient Economy, by 2025 the "preferred" Markey-Platts CAFE bill (H.R. 1506) would be saving 340 million metric tons of CO2 and 2.5 mbd of oil -- not chicken feed, but only one fourth and one half, respectively, the reductions I calculate for the Dingell hybrid carbon tax (assuming that the annual tax ramp-up proposed for the first five years continues indefinitely). Moreover, most of the gasoline savings under the carbon tax would come from reductions in driving that would confer huge ancillary benefits such as less highway congestion, fewer crashes, and more walking and biking, whereas under Big Green's CAFE route, vehicle miles traveled would actually increase as driving became cheaper.

The crackpot realists of Big Green, as C. Wright Mills might have branded them, reply that a carbon tax is politically unsalable and won't be needed once Congress "puts a price on carbon" by enacting a carbon cap-and-trade system. The dirty secret here is that the cap-and-trade proposals now in vogue are much loved by special interests who see limitless possibility for "gaming" the system, and Big Green has an equally limitless appetite for "allies" among the corporate elites. There is no other possible explanation for Big Green's deafening failure to make hay of last week's Nobel Prize announcement: peace laureate Al Gore is the planet's best-known carbon tax advocate. Indeed, Gore used the occasion of his testimony before Dingell's House Committee last March to reiterate his call for replacing the regressive, anti-jobs payroll tax with a tax on carbon emissions.

Needless to say, a carbon tax and regulatory mandates like CAFE aren't mutually exclusive. In fact the higher pump prices from Dingell's hybrid carbon tax would add to, not detract from, political pressure to broaden and strengthen mileage standards.

Perhaps the environmental establishment will get its way and Congress will pass a CAFE bill while continuing to ignore the growing calls for taxing carbon. In that event, what enviros will brand a home run will in reality be more like an infield single, and the principle of reflecting climate damage and other "externality costs" in energy prices will continue, like the proverbial elephant in the parlor, to be studiously ignored.

"What good are forty freedoms without a blank space on the map," Aldo Leopold wrote, just before mid-century. It's difficult to match that eloquence. But in our own latter-day, wonky way, we might best follow Leopold's example by asking: What good are mileage standards, LEED certificates, renewable-energy quotas, and the rest of the fiddly patchwork of energy mandates without carbon taxes to inform and influence billions of individual and social decisions every day to reduce fuel use and, collectively, transform the U.S. into a truly energy-conserving society?

Charles is an activist, energy-economist and policy-analyst. He “re-founded” NYC’s bike-advocacy group Transportation Alternatives in the 1980s, helped found the Tri-State Transportation Campaign and Right Of Way in the 1990s, and co-founded the Carbon Tax Center in 2007. Charles’s writings include books, journal articles, op-ed essays and landmark reports such as Subsidies for Traffic, Killed By Automobile, and the Kheel Plan on financing free transit in New York City. In the 1970s and 80s Charles gained prominence for deconstructing the spiraling costs of nuclear power as author-researcher and expert-witness for state and local governments and environmental groups such as NRDC and EDF. A math-and-economics graduate of Harvard, Charles lives with his wife and two sons in lower Manhattan. For more, click here.

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  1. sunflower's avatar

    sunflower Posted 6:26 am
    15 Oct 2007

    In your vetoHe has a lot of riders in his carbon tax bill, like a war tax on gasoline, and urban sprawl tax.  The carbon tax is a big deal and needs its own pillar in the sun.  Dump the riders.  Do the right thing in the face of a veto.  

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  2. Jon Rynn's avatar

    Jon Rynn Posted 7:01 am
    15 Oct 2007

    Charles, can you answer a question......about the carbon tax -- What happens if the carbon tax is successful, even slightly, and the revenues for the Federal budget go down?  Won't painful cuts then have to be made somewhere else? Wouldn't a carbon tax be a way the Right could try to kill government off?

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  3. Ron Steenblik Posted 8:14 am
    15 Oct 2007

    That's sillyJohn writes:
    Wouldn't a carbon tax be a way the Right could try to kill government off?


    If that were the case, European governments -- with their high taxes on gasoline and diesel (current prices in France are around $7.50 per gallon for gasoline) -- should have disappeared long ago.

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  4. Jon Rynn's avatar

    Jon Rynn Posted 8:25 am
    15 Oct 2007

    Ron, sorry if I wasn't clear......my understanding is that the carbon tax would replace revenues from income taxes, thus making them "revenue neutral", I believe is the term.  In other words, nobody's taxes would go up if a carbon tax was instituted.  The question I had was, what happens when revenues from the carbon tax begin to fall?  do you raise the carbon tax rate?

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  5. Gar Lipow's avatar

    Gar Lipow Posted 8:36 am
    15 Oct 2007

    RebatesThis is why I favor a sky trust style rebate system, where all (or almost all) revenues are rebated to consumers.
    This way you don't have other programs depending on revenue from a source that is extremely unpredictable and that (If it serves its purpose) will decline in the long run.  Revenue is unpredictable because for a given rate elasticity determines revenue, and as I've been learning, elasticity can be predicted only very roughly. So return revenue to the people, you compensate for regressivity, while not making any important program dependent on an uncertain source. Also, if you can communicate how it works it should lower resistance to extremely high rates if needed.

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  6. jackafuss Posted 8:47 am
    15 Oct 2007

    Carbon Plus Flat Tax -- It works!Keep it simple.  With 50 cents on gas, $50 a ton on carbon, 10% income tax on the first $100,000, 25% income tax on all above $100,000, standard deduction and personal exemptions allowed (which would make the first $39,000 income tax free for a family of four)but few other deductions.  The AMT would be gone but the revenue would be replaced by the carbon tax.  Winners would be we all be.  
    Lower marginal rates would bring jobs to America while the higher cost of fossil fuels would provide incentives for countless initiatives to conserve or to substitute clean fuels.  
    Both of these basic bills, carbon tax and simplified income tax are circulating through the Ways and Means Committee, after the first Christmas Tree bills run into the veto, it will be time for congress to get serious and solve several problems in one grand compromise.  emigration reform should be thrown into the mix if possible!  

    Jack



    The Kingdom of God is at hand!

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  7. Ron Steenblik Posted 8:57 am
    15 Oct 2007

    Changing revenuesWhat happens when revenues from the carbon tax begin to fall? Do you raise the carbon tax rate?
    The rate would need to be reasonably constant over time, and revised only in light of changes either in the estimated social cost of carbon emissions, or market in prices (e.g., linked to a three-year average).
    If revenues from the carbon tax were to fall, there are other sources of government revenue that could be adjusted upwards if need be. It is unlikely that the income tax would be totally displaced by a carbon tax.

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  8. Jon Rynn's avatar

    Jon Rynn Posted 9:00 am
    15 Oct 2007

    So everyone would have to understand......that the income tax (or consumption tax) would have to possibly go back up a bit, or maybe a fair amount.

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  9. Ron Steenblik Posted 9:13 am
    15 Oct 2007

    YesThe whole point is that there is not some iron-clad law that links a change in the tax structure to a change in tax revenues and expenditure. Governments adjust various taxes all the time in order to obtain some revenue target.

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  10. Sam Wells Posted 10:57 am
    15 Oct 2007

    Budget lesson time?Over half of the budget goes to medical programs such as Medicare, Medicaid, Social Security, and other federally mandated programs.  Then you have to pay for national defense, debt service, and arcane stuff like that.  The "discretionary" part of the overall budget is extremely small.  Legislators fight over the scraps usually as the "other white meat" we know as pork.  
    So you can't divert taxes from from the core, non-discretionary programs or they would implode.  I suppose one could repeal all the tax cuts to the rich and apply that to global warming efforts, but is that likely or even enough money?  
    I'm just trying to be realistic here.  You can't act like you have a clean slate - and you know that people will fight over money more than anything (except, apparently, the 800 billion in funny money we spent in Iraq already).  Even a small tweak to the tax code will make sheep roar like lions!  /sam

    Onward through the fog

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  11. Jon Rynn's avatar

    Jon Rynn Posted 11:08 am
    15 Oct 2007

    Sam, you put it better than I did......budget politics are extremely heated.  The tax cuts for the rich have probably been spent ten times over already if you look at all the health care, education, debt-reducing, and other programs that are desperately needed, much less for global warming.  You'd have to rescind the tax cuts for the rich that Reagan got, and then bring the corporate share of the Federal budget back up from the 6% now to the over 20% it was in the 1950s.  And then there's the military budget...

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  12. Gar Lipow's avatar

    Gar Lipow Posted 11:34 am
    15 Oct 2007

    taxes>You'd have to rescind the tax cuts for the rich that Reagan got, and then bring the corporate share of the Federal budget back up from the 6% now to the over 20% it was in the 1950s.  And then there's the military budget...
    Yes. Not quite all that. I would say repeal the Reagan and Carter and Nixon tax cuts. Take it back to where it was under Kennedy. Cut the Military Budget. Add a Tobin tax.  That is how you finance reasonable social programs and finance fighting global warming.

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  13. Ron Steenblik Posted 11:34 am
    15 Oct 2007

    Sam is right, butYes, there is a high degree of non-discretionary spending, and some revenue sources are hypothecated (i.e., earmarked to particular categories of expenditure). But I think you guys (Sammie and John) are being too, if I may say, conservative in your views on possibilities for change within the tax system.
    Here's a concrete example: Every time there is a GATT or WTO trade round, import tariffs are reduced, which has a similar effect on federal budget revenues as your worried-over decline in carbon-tax revenues. Somehow the government copes.

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  14. Ron Steenblik Posted 11:35 am
    15 Oct 2007

    Sorry, I meant to write "Jon"

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  15. Jon Rynn's avatar

    Jon Rynn Posted 12:00 pm
    15 Oct 2007

    No prob Ron......I like the idea of the Tobin tax, forgot about that, but I just wanted to provide you all with the link to "THE DECLINE OF CORPORATE INCOME TAX REVENUES", a report out of the Center for Budget and Policy Priorities.  They are the ones who found that corporate revenues as a percentage of Federal revenue has gone from 28% to 8%; David Cay Johnston, in his book "Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich - and Cheat Everybody Else" points to the same problems, especially for the superwealthy.
    Ron, you might be amused to know that Thom Hartmann, daily radio show host at Air America, often relishes pointing out that all Federal revenues came from the tariff until after the Civil War, and was still significant before World War II.  I'm not advocating depending on tariffs for a dependable revenue stream: I'm much more interested in having the richest and most powerful contribute their fair share.Of course, since they are the richest and most powerful, that makes it the most politically difficult revenue source to get.

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  16. Ron Steenblik Posted 2:25 pm
    15 Oct 2007

    Or a higher VATEconomists have long advocated increasing the amount collected in the form of consumption taxes (a value-added tax or goods & services tax) as having the least-distorting effect on the economy. The reaction of folks in the USA to such notions is that such taxes are not progressive. Yet high VAT rates are common in many of the comparatively "socialist" countries of Europe, who long ago realized there are other ways to help the poor. The VAT in most of the EU is around 20%.

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  17. Jon Rynn's avatar

    Jon Rynn Posted 2:34 pm
    15 Oct 2007

    I was going to suggest a VAT......because otherwise a carbon tax becomes very complex -- how do you actually levy the tax?  Carbon use is mostly a part of production, even in the case of wholesale and retail, it can be pretty easily tracked (trucking, etc.).  Otherwise, you'd have to have a system of refunds, etc.  Would be interesting    to figure out how to tax imports -- a carbon vat would be quite high on Chinese imports, but might be lower for German products.
    I guess France just woke up, Chicago's going to sleep! A bientot.

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  18. Colin Wright Posted 3:34 pm
    15 Oct 2007

    Monbiot on carbon rationing ...Monbiot considers (but rejects) carbon taxes in Heat. Here's his reasoning:

    In theory, you could design a tax and rebate system which ensured that money was transferred from the rich to the poor and which was constantly adjusted to maintain a steady cap on the amount of carbon the country produced. But while it would be no harder to implement than a rationing system, it would, because of the complex system of fees and rebates, be more difficult to explain. Complex ideas seldom do well in politics, as most people do not have the time or patience required to understand them.(p.44)
    While I think the Brits are further ahead of us in thinking about GW, I do think it will be a while before Americans are willing to consider rationing. But it did work here in WWII, and the libertarians among us might be pleased when Monbiot writes:The market created by carbon rationing will automatically stimulate demand for low-carbon technologies, such as public transport and renewable energy. In other words, in every respect this proposal will be less statist than its competitors.(p. 47)

    Of course, I think when Peak Oil breaks into public consciousness, then the arguments for carbon rationing will make much more sense.

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  19. lorna salzman Posted 1:57 am
    16 Oct 2007

    Komanoff is right on the markCarbon Tax Center co-director Charlie Komanoff is, as usual, completely correct in his analysis as well as in his criticism of those environmentalists who are still looking for ways of avoiding a carbon tax, much as Nordhaus & Shellenberger are. These people are the ones Al Gore tried to reach with an "inconvenient truth": that rapid radical reductions in CO2 can be achieved only by radical increases in the price of energy. Why are so many activists ready to accept failure? Why are they trying to rationalize their opposition to higher energy costs? Why are they pretending to speak for the entire American public when they complain that 'the public" won't accept higher prices? Why are they pretending that the situation is less dire than it really is? Why are they taking the side of the naysayers, the deniers, the sceptics, and the doubters, by opposing the single most effective mechanism available to us in the remaining time frame for averting the tipping point, the point of no return? Why are these people literally SELLING OUT THE ENVIRONMENT, selling out their real friends, and aligning themselves with the ENEMIES? If there are conspiracy theorists out there, they should get busy and figure out the answers to these questions. Are they being paid by the coal industry? By the utilities? Who has bought them off? And if these are not the answers, then the only conclusion is that these people are STUPID, in which case they shouldn't be listened to any more than we listen to Bjorn Lomborg and his ilk.

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  20. Jon Rynn's avatar

    Jon Rynn Posted 2:18 am
    16 Oct 2007

    Lorna, I don't understandyour nasty attitude towards people that question what some people are doing or proposing.  For instance, I've proposed that we have a World War II-style emergency, and that we need a radical program to transform society now.  My problem with a carbon tax is that it may not be fast enough, that we should just go and transform the civilization.  So why does that put me in league with Lomborg?  You've done good work in the past, I don't understand why you're attacking sincere criticism.

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  21. drosenblum Posted 5:39 am
    16 Oct 2007

    Not the Carbon Tax Center This TimeJust to avoid any confusion, "Killing Me Loudly" reflects Charlie's views rather than those of the Carbon Tax Center.  As the co-director of the Carbon Tax Center, I note the following points:



     The "green establishment" that Charlie criticizes has been attacking Congressman Dingell, not the carbon tax.  It has legitimate reasons to be upset at Dingell about CAFE. In addition, I wouldn't have referred to a monolithic green establishment.

     I would not have used the "clear-cutter on crank" language, which suggests an irrational drug-crazed response.  In my view, the responses to Dingell on CAFE issues are entirely rational.

     I do agree with Charlie that Dingell has not presented the carbon tax in the most productive fashion.  Dingell has, however, done a tremendous service by adding his clout to the carbon tax legislation already proposed by Congressmen Stark, McDermott and Larson.

     I wouldn't have compared a one-time CAFE change to the questionable assumption that the Dingell ramp-up would continue indefinitely.

     I wouldn't have used the "crackpot realists" language.  We do differ with the political analysis of many cap-and-trade proponents, in part because we're convinced that a revenue-neutral carbon tax is politically feasible when compared to the effective tax that results from a cap-and-trade scheme.  

    I would not have used Charlie's "dirty secret" language nor his statement that 'Big Green has an equally limitless appetite for "allies" among the corporate elite.' I accept the fact that many people for whom I have great respect currently support cap-and-trade for rational reasons, although I'm distressed that some environmentalists support a form of cap-and-trade that would give away allowances.

     I disagree with the statement that "Perhaps the environmental establishment will get its way and Congress will pass a CAFE bill while continuing to ignore the growing calls for taxing carbon."  The environmental establishment generally wants to put a price on carbon and I'm hopeful that more and more organizations will recognize that carbon taxes are the optimal approach.  The groups Charlie attacks have not attacked carbon taxes.

     Re Charlie's final point, asking "what good are mileage standards, [etc.}?  My answer would be  a lot, but not enough.  We also need a carbon tax.

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  22. rauschpfeife Posted 7:32 am
    16 Oct 2007

    Crackpot realismIt's disappointing to see Dan Rosenblum backpedalling so frantically from his colleague Charlie Komanoff's insightful and trenchant analysis. "Crackpot realist" seems exactly the right term.

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  23. rsmith02 Posted 1:20 pm
    16 Oct 2007

    Taxes or emissions cuts?I don't see how taxation will achieve particular levels of emissions cuts.  
    The goal is emissions reductions- so do you set the tax at X level that roughly puts us on the desired emissions trajectory and is regularly tweaked to keep us on the right path?  Without that mechanism it seems that taxation levels may not work at all as intended as others wrote above that price elasticity re: carbon is only roughly understood.
    I'm also highly skeptical that trading carbon tax revenue for income tax revenue will enable us to meet our climate goals.  If we don't pour money into R&D, weatherization programs, new mass transit, etc, we may be left with people just paying the "tax" in the form of gasoline and home heating fuels as they have no other option and the market has failed them.

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  24. nancylaplaca Posted 2:09 pm
    16 Oct 2007

    Monolithic NRDC/EDF raking in $120 million/yearI applaud Charlie's comments. I'm tired of the "big greens" sidling up with industry. It's like the "promise" of "clean" coal and carbon sequestration. It's a very expensive, silly dream that we don't have time to indulge.  Big Green just slowly buys off the opposition - otherwise why would the Clean Air Task Force, Western Resource Advocates, EDF, NRDC, the IL Lung Association and lots of other groups push gasified coal and CO2 sequestration? Because The Joyce Foundation handed out lots of grants. Carbon taxes would work, and would cut into the profit of corporate America, which is why they are fighting it tooth and nail. And Big Green seems more interested in courting industry than taking hard positions. What a shame.

    Nancy LaPlaca

    http://www.energyjustice.net/coal/igcc

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  25. Ron Steenblik Posted 3:24 am
    17 Oct 2007

    RE: Taxes or emissions cuts?Why is this debate about carbon taxes still styled by the right as a hidden agenda to increase government spending, and by the left as a hidden agenda to starve government of revenues? The question of what to tax and how much cannot of course be totally divorced from the question of the total tax burden, its incidence, and the level of government expenditure. But policy makers do have some latitude over the total fiscal envelope. Elected officials can decide, for example, to invested more government money in in R&D, weatherization or mass transit. Whether the money to pay for that comes from increased overall spending, or cuts elsewhere (e.g., in harmful subsidies in other areas) is a political choice.
    In my view, it is putting the cart before the horse to condemn carbon taxes on the basis of prior assumptions that either the resulting revenues will be too much or too little. There are other ways to raise government revenues, if that is necessary, or to return some of the revenues to taxpayers, if that is desired.

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  26. Jon Rynn's avatar

    Jon Rynn Posted 4:54 am
    17 Oct 2007

    Ron,I think you've been very helpful on these matters, and it's forums like this that allow us to hash these things out.  It may be the case that in order for carbon taxes to get a full hearing, they will have to be presented in the context of a full package of taxes, and even a budget, on a time-line, like 5, 10, or 20 years, so that we can figure out how they work.  What I'm getting out of this is that to talk about carbon taxes in isolation is not the way to do it.

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