May 25, 2014

Fee on carbon needed

It’s time for a carbon tax. No, actually, we need a carbon fee.

We’ve already had a carbon tax in place for one sector and many decades. There are both federal and state taxes levied on gasoline. However, while these taxes were once used to build and rebuild our nation’s highways, like many taxes, these have been diverted toward other governmental needs.

Meanwhile, our roads and bridges have gone neglected. Some bridges have even fallen down, which is something we imagine happening only in other nations, not in the greatest economy in the world.

The problem with taxes is politics. Economists view taxes in a very different light than do politicians.

I once had a discussion about the nature of taxes with a legislator in Alaska. I’d explained to her that, to an economist, taxes are used to fund fairly essential services that cannot be efficiently provided by the private sector. Or, taxes ought to be used to discourage us to do some things that cost others, and hence encourage us to do other things that are perhaps more benign or more economically justifiable.

She told me that, from a legislator’s perspective, taxes are used to generate revenue to spend. She sought to tax those who can be coerced most easily to pay, rather than who ought to pay. We disagreed, but I digress.

We have to trust politicians to take our taxes and use them wisely. I have more faith in establishing a carbon fee that ensures we direct those revenues to mechanisms that might solve the global warming problem.

Now, just to invoke the term global warming I know generates some controversy. Some do not believe that there is a warming trend, but few scientists believe that any more. Others acknowledge a warming trend, but don’t believe it is solely, or even mostly, caused by humans.

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