In the month since Republicans took control of the House, Senate and White House, they’ve been talking a lot about taxes. Unfortunately, the talk is about adding two entirely new taxes to the code.
Earlier in the year, House Republicans spent several days talking up the idea of a new 20% border tax, the folly of which we discussed in this space recently.
This week, a group of old-guard Republicans and business leaders — including Reagan administration officials, former Wal-Mart chairman Rob Walton, and venture capitalist Thomas Stephenson — were in the White House pitching a new carbon tax to fight global warming.
The idea is to impose a $40 tax for every ton of CO2 emitted in exchange for a “significant” rollback in EPA regulations.
This group, called the Climate Leadership Council, describes this as a conservative, free market approach to the fight against global warming, one that will, according to its report, “strengthen our economy, benefit working-class Americans, reduce regulations … and consolidate a new era of Republican leadership.”
On the surface, there’s a case to be made for taxing carbon rather than regulating it, because a tax is a far more efficient and direct way of getting results, while regulations are slow, cumbersome, scattershot and hugely expensive.
But dig just a little deeper and you can easily see that this new carbon tax won’t deliver on any of promises being made.
First, no matter where it starts, this new tax, like everyone other one ever enacted, will grow in size and complexity. The Council itself wants it to “increase steadily over time.” And they had to add another new tax on imports to prevent countries that don’t impose a comparable carbon fee from taking advantage.
No matter how well constructed, this tax will redirect resources away from their most productive uses and into government coffers. That is not how you strengthen an economy.
Plus, while the tax would start immediately, the EPA’s regulatory authority would only be “phased out.” This is naive in the extreme. Once the tax is in place, there will be endless pressure to keep both the tax and the regulations.
Consumers, of course, will ultimately bear all these costs in the form of higher prices on everything. But the plan proposes to return “all the proceeds” of the carbon tax (minus the government’s handling charge, of course) to the American people in the form of dividend checks.
In other words, these Republicans not only want to create a brand new tax, they also want to create a brand new middle-class entitlement.
Finally, the Council has deluded itself into believing that if Republicans get a carbon tax enacted, they will win over legions of young voters, Latinos and Asians who are “deeply concerned” about global warming.