TAX VS. CAP-AND-TRADE: CONGRESSMAN RAISES STAKES

Here’s the good news: The more it gets debated, the better the system will work. Here’s the bad news: Its going to get debated until you can’t stand to hear another word.

Counting On Failure, Energy Chairman Floats Carbon Tax
Edmund L. Andrews, July 7, 2007 (NY Times)

WHO
Representative John D. Dingell (D., Michigan), chairman, House Energy and Commerce Committee,

WHAT
Dingell announced he will introduce a “carbon tax” which will exact a price for greenhouse gas (GHG) emissions.
bottom line on the carbon tax: economists understand it. (click to enlarge)

WHEN
Announcement July 6, in anticipation of a statement broadcast July 8.

WHERE
The statement was made in Washington for broadcast on C-Span and pertained to U.S. GHG emissions.

WHY
- The carbon tax, seen by many economists as the simplest way to discourage GHG emissions and develop alternative energies, is considered politically dead-on-arrival due to voters’ distaste for any kind of new taxes. Also, such a tax would tend to be regressive, burdening the poor and middle classes inequitably. Proponents say tax rebates could protect them.
- Dingell’s announcement is a challenge to democratic leadership which has been pushing for effective anti-emissions legislation and is more seriously looking at a cap-and-trade system.
- Cap-and-trade shifts the burden to business by putting mandatory “caps” on their emissions, allowing those who streamline to sell unused credits and forcing over-emitters to purchase the right to do so. Proponents say cap-and-trade has been very successful in curbing acid rain emissions. Opponents say businesses’ costs will be passed to consumers and point to failures in the EU system. Proponents say the EU has learned from its mistakes and is fixing its system.
this is just the beginning. Just before the 4th, Lieberman and Warner announced their package. (click to enlarge)

QUOTES
Dingell: “I sincerely doubt that the American people will be willing to pay what this is really going to cost them…I will be introducing in the next little bit a carbon tax bill, just to sort of see how people think about this…When you see the criticism I get, I think you’ll see the answer to your question.”