Friday, June 06, 2008

Hansen On A Carbon Tax

James Hansen is the world's best-known climatologist. Lately, he has been making some attempts at policy prescription, and his latest effort looks a bit like what Dion's tax shifting plan might look like if the details of it are ever released. Hansen calls his scheme
"Carbon Tax and 100% Dividend":

“Carbon tax and 100% dividend” is spurred by the recent “carbon cap” discussion of Peter Barnes and others. Principles must be crystal clear and adhered to rigorously. A tax on coal, oil and gas is simple. It can be collected at the first point of sale within the country or at the last (e.g., at the gas pump), but it can be collected easily and reliably. You cannot hide coal in your purse; it travels in railroad cars that are easy to spot. “Cap”, in addition, is a euphemism that may do as much harm as good. The public is not stupid.

The entire carbon tax should be returned to the public, with a monthly deposit to their bank accounts, an equal share to each person (if no bank account provided, an annual check – social security number must be provided). No bureaucracy is needed to figure
this out. If the initial carbon tax averages $1200 per person per year, $100 is deposited in each account each month (Detail: perhaps limit to four shares per family, with child shares being half-size, i.e., no marriage penalty but do not encourage population growth).

William M. Connolley (Stoat) questions the proposals underlying simplicity:

So what in the crystal-clear principles allows you to decide if it should be limited to n shares per person? And looking harder, what allows you to decide it should be an equal share per person? Is it only the lack of any other method of division?

and much back and forth takes place in the comments. Apparently, the Swedes have a carbon tax that gets returned to you in the form of income tax cuts.

Note: I'm not expressing too much in the way of opinion in these carbon tax vs. cap-and-trade posts because I don't have particularly strong opinions either way. One point that Dion has made, and that Hansen makes in the above, is that a Carbon tax is far easier to implement than a cap-and-trade market.

PS. Peter Barnes is this guy.

PPS. McLelland is a fierce advocate of Cap and Trade. His arguments are not without weight.


Doubting Thomas said...

Does "far easier" equate to "better"?

People opposed to cap and trade are generally those that don't understand the mechanics.

What happens in the system where people get nice little cheques in the male (i.e. tax rebates)? They go and spend it on a big screen TV or a new car or something else that has a ripple effect on GHG productin.

I'm curious...what's your stance on the GST cut?

Doubting Thomas said...

i'm a retard. i meant "in the mail"...

bigcitylib said...

"Far easier" means better in that it means quicker to get up and running, and less of an administrative infra-structure to keep it going. It does not mean better if you give other considerations greater weight.

GST cut was a waste. I object to it because too much of it gets eaten up before it reaches the consumer.

Doubting Thomas said...

Pardon my sketicism, but I believe you're running into another gun registry situation whereby it should be easy to implement but somehow the government blows its brains out on setup and administration costs.

Full disclosure, I'm in favour of a private sector solution. When there's money on the line (i.e. a cost associated with emissions), corps will have buy-in on the follow-through. The government's role should be limited to establishment of caps/credits and setting up the rules. Then, oversight.

I brought up the GST because it encourages wrong behaviour in the same way as a tax rebate from carbon taxes would. In this case, though, it's even more perverse since the goal of reducing emissions and in a sense waste, is negated by handing money back to consumers that will just start the vicious circle up again.

bigcitylib said...

"The government's role should be limited to establishment of caps/credits and setting up the rules. Then, oversight."

You think doing this is administratively easier than collecting a new tax? You are CREATING a market. So Surely cap and trade has more of a problem with going the way of the gun registry (though I don't really regard the GR as a failure the way some do)than giving the tax man a little extra work?

Doubting Thomas said...

Fair enough. However, on the tax, I'm just skeptical in the "is it as easy as it sounds" sort of way. On the market oversight, governments have plenty of experience there. could make it a branch of a securities or energy regulator's domain. Besides, in either situation, there's more government jobs created. Either in market oversight roles or more tax collection.

Hey, it's not a perfect solution, but I believe taxation and re-distribution is a false utopia, especially if it ends up promoting additional spending (i.e more waste) at the end of the line as this dude's suggestion entails. As an aside, I think Dion is practically NDP in the way he views the world: i.e. loud statements with no logic.

Robert McClelland said...

PPS. McLelland is a fierce advocate of Cap and Trade.

More specifically I'm a fierce advocate of Cap. The "and Trade" aspect is negotiable.

Unknown said...

“Carbon tax and 100% dividend”

Ho ho hee hee. That's a real howler.

"GST cut was a waste. I object to it because too much of it gets eaten up before it reaches the consumer."

Administration costs for the GST should be identical now to what they were before. And whatever costs there are, they are mainly borne by businesses.

Anonymous said...

Let's see if I follow this reasoning. If the cost of the carbon tax is $1,200 per year per person then everyone gets a $100 cheque every month. So the person in Yellowknife who spends twice as much to heat a home as the person in Windsor gets the same amount in rebates. The person who lives in a major city with public transit pays $5.00 per day to get to work and gets the same amount as the person who lives in a smaller center and spends $10.00 a day on gas to get to work.
I guess all the residents of small northern communities can always move to larger southern cities so as to get an equitable share of the tax rebates.
Gee, makes sense to me!!!!