Geoscience Reference
In-Depth Information
A carbon tax is the closest thing to an ideal tax that can be imag-
ined. It is the only tax under consideration that will increase economic
effi ciency because it reduces the output of an undesirable activity (emit-
ting CO
2
). It goes a long way toward implementing the U.S. goals for
climate-change policy and meeting international obligations that the
United States has undertaken. It will have substantial public health
benefi ts because it will reduce harmful emissions, particularly those as-
sociated with burning coal. A carbon tax can buttress or replace many
ineffi cient regulatory initiatives and will thereby provide yet further
improvements in economic effi ciency.
As Table 10 shows, the recommended carbon tax would yield $168
billion of revenues in 2020, equal to about 1 percent of GDP. Because
the tax rate would rise sharply, the revenues would also increase sub-
stantially over time. Implementing a carbon tax can be a compromise
for fi scal conservatives and environmental activists as a way to reduce
growing fi scal defi cits, slow global warming, and do both of these in a
market-friendly manner.
