Carbon Tax - what would that look like?

By Irksome on Fri, Feb 1, 2013 - 7:22pm

A number of blogs and podcasts I follow frequently refer to the Carbon Tax, many of them speaking with great conviction that they expect the US to implement this very soon.  None of them go into any details on how they think this will unfold.  I've found reference to an actual tax on industries and commodities that contribute to carbon emissions (power generation, auto fuel, etc.), and also something called Cap and Trade, where the amount you can produce is capped, but unused 'credits' can be traded to others that need to go beyond their cap.

I would like to hear some thoughts on possible and likely implementations within the US that people think might be realistic.  I'm hoping to understand the topic better, but ideally avoid a heated debate on the merits.  My purpose is primarily to anticipate the potential policies in order to better plan for my personal response.  For example, if this is likely to hit me at the gas pump, I may accelerate my plans to purchase an electric vehicle.  If this is likely to hit my electric bills, I may accelerate my plans to increase my current solar electric generation.  If this is likely to be some form of personal taxation I would like to theorize the form, so I can prepare accordingly.

I suspect this will generate a debate on the scientific facts behind the human-caused global warming debate.  While that's always fun, I'm really hoping to avoid it, and focus only on what the Carbon Tax implementations and implications might be, if and/or when.  And since I live in California, I expect it's more likely when, not if.


Wendy S. Delmater's picture
Wendy S. Delmater
Status: Diamond Member (Offline)
Joined: Dec 13 2009
Posts: 1988
carbon tax: an analogy

I look at the so-called carbon tax and see only politicians who do not have a lot of good choices for getting addtiional revenue making a worst choice in some ways: the poor are going to get slammed by this. Good intentions, but a bad outcome. Good luck dealing with California on that sort of thing.

Yes we are running out of oil and othe fuels, and yes we want to protect the environment, and yes we do not want corprations destroying the environment. The thing that disturbs me is that the government might enact laws that sound great but only make things worse.

Here's an analogy.

True story: when my ex abandoned me and three small kids, the only help we got from NY State was subsidized child care. We had good and bad experiences with that. By far, the nicest place was a brand new one. It had qualified teachers, lovely toys, lots of light and air, and was conveniently located for commuters near the local railway station and roads. It was everthing the government mandated a childcare facility could be.

It also went out of business when the only children they cared for were the eight subsidized kids. They were too expensive for anyone else, and the state took over a year to pay the childcare center. Then my kids had no childcare

A carbon tax, like perfect child care, sounds great. What could be better than saving the clean air we breathe, saving the planet, protecting scarce resources, and punishing polluters - while making money at it? But if it shuts down businesses, punishes ordinary citizens who just want to survive--either directly by mandates on upgrades to their homes so expensive they cannot sell those homes OR by punishing companies until they have no jobs - Houston, we have a problem. No one will be able to afford it.

John Lemieux's picture
John Lemieux
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Joined: Mar 2 2012
Posts: 228
The Sky Won't Fall If Carbon Taxes Are Implemented

This is an article written by what I think is one of Canada's best columnists. Here he explains how the carbon tax in Australia has not resulted in the kind of problems that Wendy is concerned about in her post. And in fact a carbon tax is not comparable to a Government run program like day care and instead it is a mechnism to ensure a realistic and fair market cost for carbon.

Irksome's picture
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Joined: Jul 3 2012
Posts: 10
I must be dumb

Both your reply and the previous one were interesting, and good conversation starters, but neither addressed what I am asking.  I don't know if I'm just not asking the question the right way, but I keep asking people and cannot get an answer I understand.

Maybe, if you are familiar with what Australia did, you could explain it to me?  The article you posted says, "As of July 1 last year, Australia enacted a carbon tax of $23 a tonne that will become a cap-and-trade system in three years."  What does that MEAN?  What are they actually doing?  Who is paying?  How?  What does cap-and-trade mean in a practical sense?

I feel like I'm asking how addition works, and everyone starts talking about the conclusions reached by solving differential equations...

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Little 'ol Tax Dodger Me.

Carbon pricing, introduced in Australia by the clean energy legislation, applies to Australia's largest 500 emitters, which are companies that emit more than 25,000 tonnes of carbon dioxide or supply or use natural gas.


The carbon tax is "front loaded" into the economy. The costs are then passed on in the price of the goods and services the John citizen buys.

This makes the government very happy. Now they can brag about all the tax breaks that they are giving out to their loyal voters, and still balance the Budgie.

So my electricity price goes up. This causes my eyes to narrow and my forehead to knot. Under my breath I say to myself "How can I not pay extra for my electricity?" And I come up with the brilliant scheme of buying a yacht and anchoring for free, and make my own electricity. Now other. less responsive people are paying my tax for me. Oh, I do like the Carbon Tax.!!

Those who whinge about the tax are forgetting that the government was going to tax them the same amount anyway. The burden shifts from my sholders onto someone elses. 

You too can pay less tax if the carbon tax comes in. 

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