Does The Covid-19 Pandemic Make A Carbon Tax More Likely?
<![CDATA[By Marie Sapirie The first week of May was National Wildflower Week, which was meant to be a cue to buy native flowering plants at your local nursery. It was probably closed for browsing, but it’s not too late in many parts of the country to buy seeds or order plants for pickup. And as a matter of promoting good tax policy and sound reasoning among your fellow taxpayers, you should add that to your weekend to-do list. Plants that are indigenous to your location trounce turf grass and ornamental exotics in ecological benefits, and wherever you are, there are many interesting choices that aren’t hard to care for and that attract beneficial insects and wildlife. The only thing holding most suburban and urban dwellers back from literally making their little piece of the world a better place is an understanding that plants have a function in the landscape beyond mere decoration. Another deficit is the reason we are increasingly likely to end up with a carbon tax soon. Both the impending ecological disaster and the tax policy one are preventable. Dissuading people from ecologically and socially harmful, if generally accepted, practices is ostensibly the goal of a carbon tax. Carbon taxes have been kicked around in the United States for some time, but without a pressing economic problem, the idea has never taken off. One of the fundamental problems is that a carbon tax, merely a subspecies of a consumption tax, is inherently regressive. Taxpayers with smaller incomes would end up paying a greater percentage of their income in carbon taxes than wealthier taxpayers. Solving the regressive nature of a carbon tax is largely possible, but would involve administrative complexity. The political calculus of carbon taxation has suddenly shifted significantly. Douglas Holtz-Eakin of the American Action Forum recently said he views a deficit-reducing carbon tax as the only viable extra revenue source. The White House considered a carbon tax back in 2017, but it was primarily trying to find a way to pay for a reduction in the corporate income tax rate. The Tax Cuts and Jobs Act reduced the corporate rate without implementing a tax on greenhouse gases, and that seemed to be the end of the road for a carbon tax for a while. It’s back on the table now because of the economic damage caused by the coronavirus pandemic. The fundamental problem with a carbon tax is essentially the same: It raises revenue, but at the cost of increasing consumer prices, while not necessarily stemming pollution substantially. The regressivity of a carbon tax, even one that includes a partial rebate, is a big problem given the particularly harsh economic impact of the coronavirus on taxpayers with smaller incomes. Carbon tax discussions rarely seem to mention that a better approach would be to convince Americans of the benefits of environmentally friendly choices, rather than to tax greenhouse gas emissions. The ecological damage of modern life is real, and it’s a problem for humans now and in the future, but tax isn’t an ideal solution. The best strategy is to appeal to reason and self-interest to persuade people to stop polluting, not to inure them to a little extra pain at the cash register. So go buy native flowers and find them a suitable spot in the garden. You’ll make the native pollinator population much happier (turf grass is useless to bees and butterflies); you’ll improve the aesthetics of your neighborhood (no one honestly believes that turf grass is either interesting or beautiful); and you’ll reduce the need for a carbon tax (or at least help forestall further discussion until the next recession). This article appeared on the Forbes website at https://www.forbes.com/sites/taxnotes/2020/05/28/is-a-carbon-tax-coming/#fff241958763]]>