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The Lawrence Summers quotation that opens the Aldy paper on a tax-based approach to climate change illustrates an important point: The U.S. cannot be a climate change leader so long as it is a free-rider in the eyes of developing countries. The Kyoto Protocol and other handshake agreements are not as effective as they could be, especially when one of the largest carbon-emitting countries does not partake. A tax, then, makes the most sense.

The issue for me lies in the disproportional burden put on lower-income homes with certain policies aimed at reducing carbon emissions discussed in this week’s papers. Aldy writes that using lifetime income measures instead of static ones suggests that this imbalance is less dramatic than it might seem. But most important, tax systems can reallocate incomes from the fees in order to focus on low-income groups. Cap-and-trade systems can’t do the same.

Cost-effectiveness of the tax might be reduced by reallocating tax revenues to industry rather than using them to provide tax cuts, though. Viewed through the lens of development, these tax cuts are quite important. According to Murray, the tax cuts include business tax cuts, personal income tax cuts targeted at lower-income groups, low-income tax credits and direct grants to rural households. These development-focused tax cuts associated are a better alternative than cap-and-trade policy because they take into account the higher proportion of household income spent on energy in lower-income classes. They should, hypothetically, allow for a reduction of carbon emissions through higher energy prices while simultaneously cushioning the price change for those who will feel it most.

Carl and Fedor’s work shows that this aforementioned British Columbia tax is not particularly representative of the way carbon taxes recycle revenues. According to their paper, the BC tax is the only one that recycles all revenues in the form of tax cuts. This leads me to think that this is the best case scenario for reducing disproportionate burdens on the poor. It might not make perfect sense economically, but when only taking into account the underdeveloped sectors of society, this is the best they can get out of the deal. This is better than cap-and-trade because taxes represent the largest overall portion of incomes going to low-income groups.

Amanda Meador

Both articles—for the most part— point only to benefits of a carbon tax or cap and trade system especially British Columbia’s answer to the impact of lower income households in the form of income tax returns. The Murray-Rivers article even introduces the idea of the double dividend hypothesis or that a carbon tax can have a positive effect on the economy whilst reducing GHG’s. The Carl-Fedor article goes into depth into the options national to regional governments have into the implementation of policy and the best ways the revenues can be used.

This made me think of George Shultz and James Baker’s recent back-and-forth with the Wall Street Journal. After the WSJ posted an opinion piece (‘The Carbon Tax Chimera’) on how their Carbon Dioxide Tax proposal would not work based on lack of alternatives for energy and effect on lower income households. Shultz and Baker reply can be summed up in their last retort:
“We would have thought that a conservative, free-market, revenue-neutral, limited-government, internationally competitive, carbon-control proposal would be right in The Wall Street Journal’s sweet spot, unless of course the Journal does not agree that there is a potential threat of climate change.”

The WSJ then opened for letters of opinion from readers due to backlash from Shultz and Baker’s response. I think this speaks to the effect of public opinion rather than the understanding of facts and science. The Murray-Rivers article spoke to this in certain voting groups in Canada. Even if it a carbon tax can be a so called ‘win-win’ people will oppose the policy based on ideology and not rational making an moving even further away from a perfect market.

Sal Diaz

The most interesting aspect, to me, of these two articles is the difference in their approach to discussing the optimal use of the revenue gained by the carbon tax. "Tracking Global Carbon Revenues" breaks down the use of the revenue into three categories. 1. Subsidizing "green" spending 2. contributing to general state funds and 3. returning the funds to corporations and individuals through tax rebates and tax cuts. The revenue neutral carbon tax piece, on the other hand, said the policy had the express purpose of "revenue neutrality". While the extent of these differences can be partially explained by the difference in analyzing one policy or many, I think that when considering the possibilities for a similar policy in our own country it is imperative to consider how the funds would be used.

Whatever your individual perspective on the optimal use of the funds, I see the British Columbia Version as the most politicly feasible at the moment. With a strong Republican control of the legislative and executive, I see it as highly unlikely that a carbon tax could be imposed with the intent to invest in green energy or general funds. However, it does not seem nearly as far-fetched to think the same tax with the proceeds going to tax breaks would be passed. If 100% of the revenue gained by the tax were redistributed in the form of tax breaks, it would not conflict with the conservative ideology of a more "fiscally responsible" government. The main principle it would violate would be the concept of individual liberty, and even then, if marketed properly, it could be seen as a minor constraint on corporations but an additional freedom to the people. I expect such a policy would be extremely popular among the people and, with slightly weakened energy lobbies, would not be political suicide for moderate Republicans to support.

Monette Carli

An interesting aspect of the British Columbia carbon tax is the shift in dynamic that occurred in terms of exemptions and credits. The article by Murray and Rivers brings this up, but then fails to really dive into the issue. I think it is important to talk about why the structure of the tax changed so rapidly into a vehicle for “industrial policy.” For a carbon tax to be supported by the greatest number of people, I would argue that it is important to prevent something like this from occurring. Once certain industries become favored, the tax could transition from being a means for climate change mitigation to being a political game. By letting the tax turn into a source of favorable treatment for some industries, it is possible that over time, the original goal of reducing emissions will get lost in the midst of other agendas.

When it comes to concern about the fairness of a carbon tax, I can see how lobbying pressure from businesses and industries affected by the tax could steer focus away from reducing the burden of low-income households through tax credits. In the United States, lobbying by large corporations has led to significant changes in the tax code that are specific to certain industries and provide some corporations with unfair advantages. For example, an article released recently by the Institute on Taxation and Economic Policy outlines the effective tax rates of various industries and the results are shocking. Despite the fact that corporations are subject to a 35% federal income tax rate, corporations in the utilities, gas and electric industries have reduced their average effective rate to 3.1% through tax avoidance strategies and loopholes (http://www.itep.org/corporatestudy/). It seems as though every time a change to the tax code is introduced, corporations find a way to get around it or reduce their tax burden more than was intended. My fear is that the same will eventually happen with a carbon tax, leading to an inequitable system.

Additionally, while a major argument for a carbon tax is its ability to be revenue-neutral, the Carl and Fedor paper points out that this is not guaranteed. They provide examples where plans for revenue use are not disclosed upon implementation of the tax. Situations where no plan is in place for the revenue could become very problematic, especially when dealing with more corrupt governments.

Overall, a tax on carbon seems like a promising policy option that has potential to generate significant revenues while reducing emissions. However, implementation must be planned very carefully and monitored over time to avoid any unintended consequences or results.

Chantal Iosso

The debate about how best to spend the revenue from carbon taxes is an interesting and divisive one; however, if the carbon tax does correctly cover the social costs involved with carbon dioxide emissions, wouldn’t putting money towards green technologies be an inefficient allocation of resources? Hypothetically, with the tax, the amount of green technology use that resulted from increased prices for non-green technologies would be the cost-efficient amount, and so subsidizing it more would be at a higher cost to society than the benefit it yields. Of course, if the carbon tax is not high enough to cover the social cost then subsidizing them would be beneficial, but in that case maybe it makes more sense to just raise the tax.

I am also somewhat confused as to why some people support cap and trade over carbon taxes when they theoretically achieve the same result but carbon taxes provide higher revenue streams. I understand that the cap and trade system has been successful with sulfur dioxide emissions, but having the possibility to put a large amount of money back towards people seems both more politically feasible and more beneficial overall.

However, regardless of which is preferable, the debate as to which should be implemented seems to have unnecessarily divided people with similar views on the necessity of pricing carbon emissions. Either a carbon tax or a cap and trade system would theoretically succeed at internalizing a huge social cost, and the cost of failing to implement either because of debate is that social cost (that probably becomes steeper each year). Obviously, if one is implemented and is hugely unpopular, it could cause more damage than benefit by swaying public opinion against it. But as long as public opinion stays more or less neutral, either policy would be beneficial, and so dawdling to debate the details seems problematic.

Paul Callahan

The carbon tax continues to be a very debated idea as we can see in the paper on the BC Carbon Tax. Public fear seems to be the greatest reason for disapproval of a carbon tax although economists have showed that there are no great effects on local economies. An answer to that could be reducing income tax which leads to a double divided effect. This seems simple enough but has never been put into place. Regardless, British Columbia has been a proving ground of the effects of a carbon tax to reduce GHG emissions. A proven reduction in emissions resulted from the tax. The general concerns around the carbon tax seemed mostly covered such as the effect on low-income households being solved by tax credits. Although the carbon tax seems like it could be successful, the main problem that sticks with it is its split support. Many people do not like the sound of a carbon tax and others do not support it based on conservative ideology. This is where the main difficulty in policy implementation arises.

Phillip Harmon

Prior to today's readings I didn't have a strong understanding of what was meant by revenue recycling. The piece by Carl and Fedor really drove home for me how this works. I've got to say, this seems like a great idea to me. So long as the government is actually giving updates concerning how the revenues of a carbon tax are used and asserts that they are actually being recycled, I have trouble understanding why a carbon tax would be contentious. If people have concerns with the carbon tax being regressive, then make sure that the revenue recycled targets the low-income individuals it harms. If the concern would be that a carbon tax would stifle big industry, then make sure that tax breaks go to the affected businesses. It does not seem to me that the revenue recycling would need to follow a single mode. In my mind revenue recycling looks as though it could be a winning strategy for everyone so long as people were alright with a complicated revenue redistribution plan.

Chris Osier

The problem, as proven to be substantial in BC, for people in the institution of "neutral tax" is the distrust people feel towards government. In a republican dominated government it seems to be amplified even more with a more hands off approach. Thus to implement a bill I would think a majority of people would need to trust the government in the first place, which is highly unlikely in today's society. Whether you're a conservative that supported trump and his policies or a liberal who is seemingly watching the sciences disappear down the drain, neither side really trusts the institution no matter the candidate, and to be honest they should not trust the government. We should always have a close eye on people in power, as a sort of second set of checks and balances and this disparity in the neutrality of the carbon tax in BC is a perfect example. Their government realized that all eyes were on them regarding the issue of using this method to adjust carbon emissions and still they purposefully caused a $377 million dollar loss to BC citizens while under the watchful eye of the world. If this doesn't show how little a government can care about their policy decisions and the opinions of their citizens then I don't know where else to look for information. The distrust of the people for any government's proceedings, regardless of political orientation, is very much grounded in day to day deceit that most of us don't even witness. For one, BC's tax credit to their film industry, while understandable if derived from other taxes, is completely incoherent. The Fraser Institute's (an institution in BC) director of fiscal studies stated that “This is not a carbon-intensive industry,” he said.
“There’s really no economic rationale for why the government would use any of the tax offset for this industry.”

James Willey

The political considerations behind the implementation of carbon revenue systems were noteworthy. Specifically, “low cap-and-trade revenues may be a political feasibility feature since something that is not labeled a tax… may be implemented with less notice,” (Carl and Fedor) got my attention. It seems ridiculous to try and implement a strategy based on the basis of palatable name sakes. A stronger solution might lie in the proper approach to introducing carbon revenue plan rather than this bargaining based on title. The different outcomes in Australia verse British Columbia illustrate this point. Australia’s plan was an immediate, medium-high per ton rate on an emissions dependent market that resulted in economic shock and political infeasibility – read: it was repealed. Murray and Rivers note that British Columbia’s carbon tax was not without initial political opposition, but it has prevailed; covering about 75% of greenhouse gas emissions in the province and producing reductions up to 15%. Carl and Fedor describe the introduction of this policy as gradual, governed by a predetermined increased over 5 years. This helped avoid the economic and political disruptions observed in Australia, and to me illustrates a much better approach to “political feasibility.” Schemes framed as well planned and gradual, might quell knee-jerks quelled and the same prices per ton could be achieved without forcing (and maybe more importantly by removing the fear of) rapidly adjusting markets.

Chris Osier

Pt. 2- in an article in one of BC's business journals "Business Vancouver" that was directed towards this disparity in tax revenues and tax credits. These deceitful practices (because the tax was proposed as being cost neutral) cannot occur if anyone expects the populace to support such a tax. Its the abuse of this power and that makes up a portion of the conservative dissidence towards governmental regulations. In the same sense it seems that the liberal distrust of government lies within their distrust of the intentions of different bills and policies. Therefore, while generally speaking the liberal agenda coincides more congruently with a carbon tax, if the government were to abuse the tax, as has occurred in BC, then there may be little to no support for the tax from any party if it does not retain the principle of a 0 net increase in taxation. Granted this is a very general point of view from either perspective and is in no manner meaning to represent the whole of either, or discredit the position of more "central/moderate" parties/opinions. I merely mean to point out that whether or not the carbon tax is good for the environment, if the government abuses the tax and the reallocation of its revenue, then there is likely to be little support from any point of view within a democratic society and thus we will have to decide on a cap and trade system and suffer the loss in efficiency, create a hybrid of the two systems, or continue to emit inefficient levels of carbon. Again, very general options but I am referring more to a trend towards inefficiency when compared to a neutral tax based proposal.

Sam Ross

The Murray and Rivers’ case study of British Columbia did an excellent job of outlining the various benefits of a carbon tax in an informative and coherent manner. While some members of the general public foster a sense of skepticism towards a carbon tax, papers like this help inform communities and shed light on the underlying economics. This explains why the study showed a decline in public opposition towards the tax after its implementation. That being said, I was trying to understand precisely why opposition decreased in a relatively short period of time; that is, why did the citizens in BC start to approve of the tax? Were they merely informed of its benefits, or did they genuinely notice and approve of its climate effects? Either way, it is refreshing to see that public perception of a carbon tax can be swayed. If this can be accomplished in the US, public policy makers would (ideally) eventually advocate for a similar tax. It would be interesting to see how the US tax would compare that of the BC.

Abby Beasley

What should have been entirely unsurprising actually garnered my interest. The political ideology surrounding this debate was not initially a topic I had anticipated, but naturally there is a politically partisanship as different revenue uses are considered. Of course, the data pointing to the larger revenue coming from carbon taxes should seemingly point to carbon taxes as superior to cap and trade, but it's not so neutral when the revenue is used for "green" spending. It's easy for the authors of these papers, both Murray & Rivers and Carl & Fedor to point to British Colombia as a model revenue recycler because of the proportion of recycling for tax cuts and clear benefits to society.

With limited -- or nearly no -- prior knowledge of either option, I did a quick search for both cap and trade and carbon tax. The first results for carbon tax were all regarding Trump and his administration's lack of acknowledgement of climate change; the White House will not be looking toward one as skepticism of climate change is still prevalent amongst the Republican party. This comes as no surprise. Additionally, there are no recent news items regarding cap and trade policy.

Will Edmonds

The idea of a carbon tax is something that I have never really investigated before; these articles do a great job of explaining, bot in terms of economic theory and reality, what a carbon tax entails. One of the things that I was most surprised to learn about is the division of support for the tax on a class basis. That is to say, middle and lower class families have expressed much less support than upper class families. As we have learned of the course of the semester, environmental policy is rarely an inexpensive undertaking, on a nominal basis. A tax per unit of consumption, such as C$30/tCO2, is of course expected to cost poor families disproportionately more than rich families, relative to total wealth. Consistent with this theory, the data shows members of low and mid-level income brackets as more opposed than wealthier individuals. ¬Likewise, we see relatively more resistance to the tax among elderly, male, and rural groups, compared to their counterparts. As the paper mentions, this is significant, given the power that these demographics hold in elections. Therefore, if the tax is to be widely adopted, future carbon tax proposals should grant greater equity across income brackets and geographies, so that the significant benefits of BC’s carbon tax program can be enjoyed throughout other parts of the world.

Rainsford Reel

My initial reaction to the Murray and Rivers piece was one of anger, towards both policy makers and the economic community as a whole. Though there are noted shortcomings in prior research, it seems overall that we have been given the gift of a natural experiment in which we can observe how a carbon tax has worked. The findings discussed in this piece seem to suggest that the system has an overall positive effect on carbon emissions, a goal shared by most governments in today's world. Figure 3 shows that over time household expenditure on gas has decreased, which not only helps reduce emissions but also helps conservation of resources for future generations. By using less and conserving more, it would seem that we are buying ourselves time to better perfect alternative forms of energy. Moving to Figure four, it is clear that though initially the tax is viewed negatively (something I would argue is true for just about any new tax) over time, the general population begins to see its benefits. Is long run improvement overall not worth an initial backlash?
My last bit of anger towards the economic community and policy makers comes from what the authors list as the shortcomings of their study in the conclusion. The authors suggest that there has been no study to determine the magnitude of "leakage" due to the carbon tax. My question is why not? If this is known to be a major issue related to the implementation of the carbon tax, why hasn't anyone in the economic community taken the initiative to investigate it? Lastly, (and then I will get off my soapbox) the authors argue that a shortcoming of the tax is its difficulty to implement as a policy. All policy changes are burdensome processes, but as policy makers navigating these waters is your job. The difficulty is part of the territory.

Justin Pedersen

As I read Murray and Rivers’ paper concerning the implementation of a carbon, income-neutral tax in British Columbia, I was relatively surprised that the tax passed in spite of the initial lack of support. Drawing parallels to the negative public perception upheld in America, I became interested in the factors that led to ratification and how these factors differ in the United States (i.e. how could such a tax pass in British Columbia and not even be considered in the US). After reading the section discussing the history of the tax, I realize that there are three essential qualities that differ among the two countries that affect such policy: Major sources of power generation, vote ideology, and leader political platforms.

First, major sources of electric generation drastically differ between British Columbia and the United States. Due to the large volume of surficial water resources present in British Columbia, the country’s primary source of power generation has persistently been hydroelectric power. While dams yield environmental ramifications of their own (i.e. especially in a region in which massive fish migrations transpire), hydroelectric power serves as a carbon-free energy source. On the other hand, power generation in the United States has been historically dominated by natural gas and coal, both of which generate high volumes of GHG emissions. Thus, due to the decreased pre-tax emission in BC in the power and energy industry (i.e. a notorious large emitter), relatively less lobbying against carbon taxes emerged, thus accounting for its ratification. As long as the US continues to derive a major portion of its power from carbon sources (e.g. coal and natural gas), opposition will potentially continue to block approval.

Additionally, the ideology adopted by the masses and leaders in the United States drastically differs from the public opinions held in BC. As the article states, the BC electorate continually expresses high interest in the environment and thus is receptive to novel policy, such as a carbon tax. While polls show that a majority of American oppose increases in offshore drilling and other environmentally detrimental policies, only one-in-five “aim for everyday environmentalism” (http://www.pewinternet.org/2016/10/04/the-politics-of-climate/). Furthermore, the article reveals that the proposition of a carbon tax was met by high support from BC Premier Gordon Campbell. Conversely in the US, as manifested by his appointment of Scott Pruitt as head of the EPA and various executive orders (e.g. the Dakota Pipeline), US President Donald Trump will not likely advocate for a pro-environment policy (e.g. a carbon tax) anytime in the near future.

Thus, due to US reliance on fossil fuels and public / leader lack of concern, carbon taxes have thrived in British Columbia while experiencing continuous rejection in the United States.

Parker Kellam

This week's readings lead me to think of a few questions:
First, if politicians didn't feel like they needed to watch out for their own jobs, would there be more political support the carbon tax?
Second, if a tax can be implemented without harming the poor, and doing minimal damage for firms with high emissions, are there other reasons a carbon tax could raise objections?
And finally, Murray and Rivers state: "Between its inception in 2008 and 2015, the BC carbon tax has generated C$6.1 billion in revenue, yet corresponding tax cuts have been more than C$7.1 billion." Maybe I am misunderstanding something, but shouldn't that benefit the people of BC is the cuts were more than the taxes raised?
Before reading these papers, I thought that I could get behind a carbon tax. The papers further fortified my thoughts. If done in a thoughtful way, the tax could be very beneficial.

Alana Babington

After reading both the articles for today and the article from Tuesday, I find myself swaying towards viewing the benefits of the cap and trade system and a global carbon tax as outweighing the costs. I was very glad we read Tuesday’s paper before the two pieces on direct taxes because it set the stage. I referenced the Tuesday paper several times to get a hold of the tax-based approach of preventing pollution. However, when reading the Carl and Fedor paper, I was having some trouble completely deciphering the differences between the carbon tax and the cap and trade. To my understanding, the cap and trade system put a ‘cap’ on carbon emissions and issue allowances to emit carbon up to a certain limit, the limit being one that matches the ‘cap,’ while a carbon tax acts as a law that establishes a fee per ton of carbon emissions. The main difference between the two with regard to revenue is that cap-and-trade systems are designed to obtain revenue largely through marginal emissions. I have trouble understanding how the government decides what the ‘cap’ will be and how to allocate the allowances, with regards to cap-and-trade. Similarly, I am puzzled by how the government decides exactly which policy to implement.

Differences aside, I liked how the paper from Tuesday brought up the international challenge of a tax-based approach in that emission taxes might be undermined by “fiscal cushioning.” At first read, I did not think much of this, but after reading the other articles, there was not much mention of drawbacks like the how a carbon tax could offset changes in other energy policies. The response was the possible development of a broader measure of a country’s effective carbon tax that also accounted for energy taxes and subsidies that were already in place. My question would be how exactly to do this? Going back to the heart of the discussion in both the Murray and Rivers paper and the Carl and Fedor paper, it seems that either policy would succeed in lowering and/or preventing pollution on a global level.

Cole Wilbur

I found both articles to be very interesting. The first one pointed out how a carbon tax can be very beneficial to a country specifically citing British Columbia as an example. My initial concern was the poor public reaction to its implementation, but the article explains how that diminished over time. I hesitate to completely agree with its proposed positives of a carbon tax, because I question whether this case can be applied to many different countries with many different affecting factors. Just because it worked well in British Columbia does not mean it is a universal standard that the world should apply, instead rather they should evaluate their situations before instituting it. The second article was a comparative look at carbon tax and a cap and trade system. I found my interest peaked with the cap and trade system specifically because I recently read a Yale 360 article on the topic. The Yale article that I read brought up a number of important points regarding potential problems with introducing a carbon tax. For one, the carbon tax seems to be more restrictive in it use, while the cap and trade system would allow differing companies and groups to flex to what best suits their individual needs (attain more permits if wish to pollute more). The carbon tax may also seem to be easier and simpler at face value, but I hesitate to believe this because of past history with controversial bills. How many times in the past have loopholes been exploited on congress approved bills? Finally, the Yale article brought up a good point in that the carbon tax revolves around money instead of reduction. With a carbon tax, one is told- pollute this much and you will pay this much. Comparatively a cap and trade system is centered on reduction of the actual problem, pollution.


After reading the articles i felt like i finally got a general grasp on how the decision between taxes and cap-and-trade policies can have different effects when used with carbon. But the point that bothered me the most form the Murray and Rivers article was that the term "carbon tax" immediately causes a panic in the minds of both politicians and citizens. Just because the policy has the term "tax" in the title people immediately overlook that carbon taxes could represent a cost-effective approach to reducing emissions and in reality they put at most a negligent fiscal burden on society, or in some cases actually help the economy. After reading both articles it seems apparent that making the tax revenue neutral and lowering income taxes we could see this double dividend hypothesis occurring in real life which after repeatedly hearing about it in our class I would love to see it implemented as a test to see if its a genuinely possible outcome. Personally If implemented while keeping all of the main points of concern that the authors mentioned in mind I think it could be an extremely helpful and beneficial policy.

Courtney Freudenthal

As some classmates have previously discussed, there is a need to figure out what happens to the revenue gained by either a cap and trade program or carbon tax program. "Tracking Global Carbon Revenues" addresses this issues as it discusses how the structure of a given program can allow funds to be allocated to general government spending, green energy R&D, or redistribution to consumers and businesses. Previous to reading this article I had not thought extensively about where these funds should go and what repercussions could come from different allocation strategies. At first it seems like such an easy answer to say that the revenue should go toward green energy industries, but as seen in the articles, doing so reflects certain political and economic consequences. Depending on which program is being used, cap and trade or carbon tax, the outcomes can look a bit different. Now I see there are good arguments to be made for using the revenue in other ways, or structuring the program towards revenue-neutrality. I am not quite sure I am convinced which method of allocation is best, but seeing that there are many more feasible choices of allocation means that there is still hope that we can find a program that best fits the United States.

Robert Lance

It's obvious to see in the Murray and River's paper how successful the carbon tax policy has been in British Columbia regarding reduced emissions. Additionally, I really like how the provincial government made sure the tax was income-neutral. Although the burden (as a proportion of income) may weigh more on lower-income households, large economic inefficiencies are created in a markets where buyers and sellers face different prices. This is especially important in energy markets as liquidity needs to be as tight as possible for the market to function.

I strongly agree with what Justin said regarding differences in regions, but I think we need to remember that B.C. is a unique province in Canada in its own right. Oil sands and natural gas are the largest producer of GHG emissions in Canada, and those are the result of fossil fuel extraction in Alberta and Saskatchewan. Therefore, because of easy access and lower relative hydropower generation capabilities, the same carbon tax could not be feasibly enacted in those provinces. Many of these emissions issues are more effectively solved at the state level. Therefore, it's difficult to see the logic of applying B.C.'s carbon tax at the federal level in the U.S. I think this is oddly similar to smoking bans and "sin taxes" on cigarettes. Minnesota has the third lowest smoker rate in the U.S. as of 2015. Smoking bans were met with little to no opposition, and three new stadiums were built largely by tax revenues from smokers. Why are tobacco taxes and bans so effective in Minnesota? IT'S COLD. We're naturally inclined to produce bans and taxes on cigarettes because we have less demand in the first place. Is it worth going outside for a ten minute break in below zero temperatures? However, it would be ridiculous to assume that the same legislation would pass in Kentucky, West Virginia, or Mississippi, where demand curves would never have to consider the weather. Furthermore, hydroelectric generation capacity has maxed out in the U.S. We're all dammed up. The comparison of B.C.'s and the average U.S. state energy demands just doesn't work. I do love the concept of the carbon tax, but it needs to be handled at the state level and not at the federal level. The state implementation of Renewable Portfolio Standards, each with unique goals/requirements, is a great example of how different states have vastly different characteristics in terms of energy consumption/production.

Elise George

Duke’s Working Paper went in depth on the specific GHG tax in the British Columbia. The paper overall is pro tax in reducing gas emissions while not harming the overall economy. This effect is partly a result of the BC’s increase of taxes on GHG emissions while decreasing taxes in other areas. Harrison discusses the five developments that he believes contributed to the implementation of the carbon tax. I question if Harrison is suggesting that these five factors serve as “rules” that other countries would be obligated to follow to pass a tax. Additionally, I am curious why the tax is only on GHG emissions. Why did they exempt other fuel uses, such as planes and ships, or methane from fossil fuel production? The second article further emphasizes the structure of an environmental tax. It also supported the concept mentioned earlier about the redistribution of carbon taxes back to corporations or other projects that benefit society. I hope in class we can discuss the question of government inefficiency in handling taxes. Both articles emphasize that these taxes can be a huge benefit, however, I have always known the greatest risk is how the tax revenue is managed.

Michael Robinson

After reading the Murray and Rivers piece, it confounds me that fiscal conservatives in Congress don’t fully support a carbon tax. It seems to me that a fiscally responsible person running the country would defer to economists as their source of expertise on the subject. Well, economists generally support a carbon tax. So maybe they don’t want to implement it because they just don’t know the potential effects. Well, the tax in British Columbia provides a pretty strong case study for benefits associated with a carbon tax. Maybe their disposition is similar to tax reform advocates like Grover Norquist who oppose seemingly any type of taxation. Well, a ‘tax revenue neutral’ carbon tax has the potential to relieve tax burdens on consumers through lowering income tax or distributing carbon tax revenue directly back to households. Maybe they think it just won’t be effective in lowering emissions. Well, British Columbia would disagree. So what will it take to convince these policymakers that a carbon tax is a solid choice to reduce emissions? It is arguably the most “market-based” solution along with cap-and-trade. For someone who believes that GHG emissions are causing global climate change, what more could you want from an emission reduction policy?

nicholas george

I found both articles interesting and extremely interesting. I honestly find it astonishing that given what we know in the BC revenue-nutral carbon tax paper by Murray and Rivers, that a carbon tax with revenue distribution isn't more common than it is. I would love to know why voters are so opposed to the word "tax," even though, in this case, the majority of everyday people would benefit from this carbon tax. These typically middle to lower income rural men would be on the receiving end of the tax shift. For instance, according to the paper, "these shifts include business tax cuts, personal income tax cuts targeted at lower-income categories, low-income tax credits and direct grants to rural households." yet, the word "tax" itself prevents this from being a popular plan despite being a nearly win-win scenario all around. Additionally, from the Tracking Global Caron Revenues piece by Jeremy Carl and David Fedor, that small states with GSPs would be in huge favor of this. For instance, West Virginia has the second lowest GSP of any state in the United States; however, two large sources of that GSP for West Virginia are coal mining and chemical production both of which produce an extreme amount of carbon pollution through each respective process. West Virginia also has some of the poorest rural people in the country; perhaps, we could employ a carbon tax system on these industries to help reduce the exploitation and pollution as well as systematically transfer those revenues to some of the low-income households, or even use it to invest in job creating activities, like wind turbine farming, or gun manufactoring. In fact, https://www.brookings.edu/blog/planetpolicy/2016/04/26/coal-economy-workers-need-help-and-a-carbon-tax-could-provide-it/ this article by the Brookings institute suggests exactly that: a carbon tax would be a blessing for the West Virginia economy. Coal mining is a dying industry, and a carbon tax could offset the lost income from that decrease, while West Virginia turns to long-term, sustainable environmentally friendly industries.

Chris Shelby

Murray and Rivers provide a solid case study of a location where a carbon tax succeeded in lowering emissions and gaining more than half of the population's support. The social and economic aspects of the tax are still unclear, though. Poor people will be negatively impacted more by this tax, but findings in this study showed that this decrease in disposable income is insignificant. Maybe showing lower-income individuals this information about income tax cuts due to the carbon tax will help garner more support for it. This could be crucial in the United States, where some people might see a tax like this as unnecessary or too costly. However, this doesn't matter as long as political actors continue their passive approach to policy intervention on carbon consumption. Carbon taxes are superior to cap and trade because less energy is consumed as a result and these taxes are easier to implement. What will it take for implementation of carbon taxes in the United States?

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