Who’s for the Untax?

Tax-or-Untax versus Cap-and-Trade

Cap-and-trade has been more popular in the US and Europe, but here’s a list of arguments for and supporters of a tax-or-untax.

Arguments against cap-&-trade (C&T) and for a carbon tax or untax:

  • C&T is complicated. 
  • C&T is just a tax that lets the market set the tax rate.
  • Markets are unpredictable and so is the C&T tax rate.
  • C&T risk is costly to business and hence to consumers.
  • C&T is often used to provide windfall gains to emitters.
  • Under C&T, if you voluntarily emit less carbon, that just lets someone else emit more.

Information about carbon tax / untaxes

Who’s in favor of what?

James E. Hansen, Climate Scientist, 2008. “Cap and trade” generates special interests, lobbyists, and trading schemes, yielding nonproductive millionaires, all at public expense. The public is fed up with such business.

John Larson, House Democratic Caucus Chairman of Connecticut.  NY Times xlnk.gif. One of the most vocal supporters of a carbon tax.h

Al Gore, February, 2009. “I certainly believe that the simplest and easiest way to solve this problem would be a C02 tax that is 100 percent refundable.”

Paul Krugman. The most straightforward policy would be an across-the-board carbon tax.   •   [A pollution tax] commands the assent of virtually every card-carrying economist.

Martin Weitzman, a Harvard economist. “It’s much easier for me to think of scenarios where cap-and-trade goes crazy, prices fluctuate like mad, and people get turned off,” said “That could end up discrediting the system for a decade or a generation.”

Joseph E. Stiglitz has international carbon taxing including enforcement with trade sanctions as advocated here and taught us about the WTO precedent for using such sanctions. In January 2010 he published and op-ed advocating “a commitment by each country to raise the price of emissions (whether through a carbon tax or emissions caps) to an agreed level.”

Fredrik Reinfeldt, Prime Minister of Sweden, Taiwan News xlnk.gif, June 10, 200

Thomas L. FriedmanNY Times xlnk.gif, April 7, 2009  “Advocates of cap-and-trade argue that it is preferable to a simple carbon tax because it fixes a national cap on carbon emissions and it “hides the ball” — it doesn’t use the word ‘tax’ — even though it amounts to one. … That was true … In the past two weeks, you could hear a chorus of Republicans, coal-state Democrats, right-wing think tanks and enviro-skeptics all singing the same tune: ‘Cap-and-trade is a tax.'”

David de Kretser, Governor of Victoria, Australia, Stock & Land xlnk.gif, April 2009. Favors a carbon tax.

Greg Ebel, President and CEO of Spectra Energy Corp, Huston Chronicle xlnk.gif, April 2009. “But a carbon tax – not cap-and-trade – better stimulates the substantive behavioral shift we need … The best carbon tax would be revenue neutral, allowing both businesses and individuals to innovate, invest and deliver lower carbon emissions from their activities and be neutrally affected or, potentially, even better off economically.”