Two cheers for a carbon tax, but don’t expect it to fix everything

The Washington Post

Feb. 19, 2017

By Robert J. Samuelson

By all means, let’s have a carbon tax. It’s the best way to deal with global climate change. It would require Republicans and Democrats to compromise — a good thing — and would provide revenue for a government that desperately needs more revenue. Fine. But let’s not pretend that a carbon tax is a panacea for either climate change or too much debt.

With most Republicans — and some Democrats — hostile to any tax increase, a carbon tax remains a long shot. Still, the odds have shortened, because some respected Republican elders recently endorsed it. These include George P. Shultz, James A. Baker and Henry Paulson. All were treasury secretary and/or secretary of state in administrations from Richard Nixon to George W. Bush.

Under their proposal, the tax would initially be $40 for each emitted ton of carbon dioxide (CO2). This corresponds to about 36 cents on a gallon of gasoline and a 5 to 10 percent increase in retail electricity rates, says economist Marc Hafstead of Resources for the Future, a nonpartisan think tank. The tax would increase annually by the rate of price inflation, plus two percentage points. (If inflation were 2 percent, the tax would rise by 4 percent.)

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