The Conservative Case for a Carbon Tax
(Bloomberg Opinion) -- Republicans have long been nearly united in their opposition to any comprehensive effort to reduce climate change. Part of the opposition is political: They may be making the calculation that, although voters are worried about the issue, actual carbon-pricing programs have not always fared so well at the polls.
But a significant part of Republican opposition is philosophical: They are worried about opening the door to a centrally planned economy. For the sake of the planet — and their party — they need to let this go.
This isn’t to say that Republican fears are irrational. Consider the case of Washington State’s ill-fated carbon-tax proposal.
In 2016, centrists in the state introduced an initiative that would impose a $25 carbon tax and use the revenue to cut other taxes in the state. It’s the kind of proposal that Republican economists such as Greg Mankiw have long supported, and in fact he supported this tax. Opposing the tax, however, was a coalition of left-wing groups known as the Alliance for Jobs and Clean Energy, which said the bill didn’t do enough to tackle issues of poverty, race and social injustice. The state Democratic Party eventually lined up behind the alliance, and the measure was defeated.
Fast forward three years to the drafting of the Green New Deal resolution in the U.S. Congress. This time, the national Democratic Party enlisted the support of organizations like the Sunrise Movement to ensure that the plan would be compatible with the so-called climate-justice movement. The final product includes language “guaranteeing a job with a family-sustaining wage, adequate family and medical leave, paid vacations, and retirement security” to all Americans as well as a vow to repair the “historic oppression of indigenous peoples, communities of color, migrant communities, deindustrialized communities, depopulated rural communities, the poor, low-income workers, women, the elderly, the unhoused, [and] people with disabilities.”
No matter how one feels about this list of priorities, it goes far beyond reducing greenhouse gas emissions. Nonetheless, the Green New Deal resolution has been endorsed by the major Democratic presidential candidates.
So conservatives are correct that powerful groups on the left are seeking to use climate-change legislation to fulfill much more expansive objectives. That just makes it all the more important for them to advocate more strongly for a pro-market approach to climate change. If they don’t, then then the debate will devolve into a choice between the extreme vision favored by climate-justice advocates and the bloated, something-for-every-interest-group version favored by the Democratic establishment.
As an alternative, conservatives should offer the same type of pro-growth tax exchange that the climate-justice movement defeated in Washington State three years ago. That proposal might not have been progressive enough for Washington, but it would probably sell nationally.
There are small-government conservatives, typified by Grover Norquist, who fear that even a modest carbon tax would grow over time and be used to fund additional spending rather than tax cuts. Here Republicans should rely on an old mantra they usually invoke: Trust the voters.
Energy taxes, which affect the prices of things people buy every day, are more transparent than income taxes. (Many voters don’t even realize they got an income tax cut in 2017.) Gas taxes are so salient, in fact, that after the California legislature passed a 12 cents per gallon increase in 2017, voters almost repealed it by referendum the next year.
There is also a concern in some parts of the country that a carbon tax would be the death knell to a coal industry already in decline due to larger economic forces. Pairing a carbon tax with relief for coal miners would at least provide some recompense for job losses that are all but inevitable.
There are obvious reasons why Republicans have been hesitant to embrace carbon taxes. But American politics are shifting rapidly. Failure to articulate a climate change policy has hurt Republicans with younger voters. If economic conservatives want to stay relevant, they need to provide market-based solutions to one of the biggest challenges of the 21st century.
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Karl W. Smith is a former assistant professor of economics at the University of North Carolina's school of government and founder of the blog Modeled Behavior.
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