The Congressional Budget Office (CBO), a group of analysts who model and project the consequences of US Congress’ proposed laws, recently published a report on the economic, environmental, and societal effects of a carbon tax. The report makes it clear that rising carbon dioxide emissions risks severe economic, environmental, and societal losses for the United States. A carbon tax, which would tax companies for each metric ton of carbon dioxide they emit, will likely be very effective in reducing current carbon emissions. A previous report by the CBO projected that a price of $20 per metric ton on carbon dioxide emissions would, over nine years, generate $1.2 trillion and cut emissions by around 8 percent.
Overall, the CBO’s report is in support of a carbon tax because the sheer cost of future economic, societal, and environmental damage due to climate change is far too great to justify unsustainable carbon dioxide emissions. The report states:
“Given the inherent uncertainty of predicting the effects of climate change, and the that it could trigger catastrophic effects, lawmakers might view a carbon tax as a reflection of society’s willingness to pay to reduce the risk of potentially very expensive damage in the future.”
The CBO and other analysts have also projected that a carbon tax would harm the US economy in the short-term by, for example, reducing company profits or forcing heavy emitters to invest in less efficient but more sustainable alternatives. These costs to companies would certainly have a regressive effect on the common American worker by imposing more product costs and increased wage reductions, As such, policymakers, influenced as they are by commercial – and potentially personal – interests, have been rather slow when it comes to proposing and supporting carbon tax legislation.
One way to make the carbon tax more appealing for Americans and their representatives is to use the money generated by the carbon tax to reduce payroll tax and increase refundable income tax rebates. These changes are meant to counter-balance the higher costs of goods and services as a result of the carbon tax, thereby minimizing the impact that the tax has on struggling, low-income families.
The tax can also directly be used to fund grants and subsidies that promote clean energy programs, sustainable development, and environmental research. After all, a majority of American adults stated that global warming should be a priority for leaders and that legislators should support the development of clean energy programs. Supporting a carbon tax that promotes sustainable research and development, and the political capital it generates from supportive Americans, may very well off-set the potential losses of siding with an economically regressive tax.
Many Americans advocate for legislation such as the carbon tax in order to reduce greenhouse gas emissions. However, law making has always been a slow process when it comes to long-term projects that mitigate damage rather than generate growth. As such, it is up to us to show our support for these projects, and sooner rather than later.