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Time for U.S. to tax carbon emissions

Last modified: 7/12/2012 12:00:00 AM
Anthony Thomas was an externality. So were Sherry Garrett and Ann Narcisse. They are among at least 18 Chicago residents whose deaths in recent days were attributed to the heat wave that has baked middle America this summer.

Externalities are costs - or benefits - that are not paid by the producers or consumers of a product but by society. No one can trace a path between the carbon dioxide emitted by a polluter, the added warming of the planet that it caused, and the hot air in the last breath taken by a heat wave's victim. It's possible that, even if human activity wasn't changing the climate, the heat waves would have occurred anyway. But the links between carbon emissions and the weird and worsening weather keep getting stronger.

Fortunately, many nations are making a major effort to combat climate change. The United States and its crippled Congress aren't.

On July 1, Australia's government imposed a tax on carbon emissions by major polluters equivalent to $23.50 U.S. dollars per ton. Also this month, British Columbia raised its tax on carbon emissions from $25 to $30 per metric ton. The Canadian province instituted the tax in 2008 as a way to reduce both carbon emissions and the tax burden on individuals and businesses. It began at $10 and increased by $5 every year until it reached its current $30 cap.

European and Scandinavian nations have taxed carbon emissions for years. Even China, where environmental concerns have not exactly been front and center, plans to institute a carbon tax in 2015. The United States, which is the world's No. 2 carbon-emitting nation after China, should lead, not follow on this issue, and institute a carbon tax of its own next year.

Economist Yoram Bauman and law professor Shi-Ling Hsu, writing in The New York Times, applauded British Columbia's carbon tax system and explained how a similar system could work in the United States. In British Columbia, in just four years, the tax reduced carbon dioxide emissions by 4.5 percent and raised enough money to lower the corporate tax rate from 12 percent to 10 percent. Taxes on personal income for those earning less than $119,000 went down as well, and low-income residents get rebates to offset the increased cost to consumers attributed to the tax.

"Substituting a carbon tax for some of our current taxes - on payroll, on investment, on businesses and on workers - is a no-brainer. Why tax good things when you can tax bad things, like emissions?" Bauman and Hsu wrote.

A $30 carbon tax in the United States would raise roughly $145 billion per year, enough to reduce corporate and individual income taxes by 10 percent and still leave $35 billion to spare, Bauman and Hsu concluded. That money could be used any number of ways, from subsidizing alternative energy and energy efficiency programs to reducing the deficit.

There would also be a voluntary component to the carbon tax, which electric utilities, oil and gas companies and others would pass on. Consumers could reduce their carbon tax bill by switching to a renewable fuel, biking instead of driving to work, insulating their homes and taking other steps to curb energy use.

A carbon tax would make polluters pay for doing a bad thing, emitting a greenhouse gas that warms the planet. Through lower taxes, it would reward people for doing good things: earning, saving and investing. A bill to institute a national carbon tax will almost certainly come before the next Congress. When it does, New Hampshire's congressional delegation should unite in support of it.


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