Matt Miller on Protecting the Environment

Question: What’s your favorite progressive idea for the environment?

Miller:    I’m a cap-and-trade skeptic and I’m a carbon tax lover, so I don’t pretend to be an expert on cap-and-trade, but my worry is, you know, cap-and-trade is done as cap-and-trade largely, I think, as a way for politicians to avoid saying explicitly we’re raising taxes on energy.  And since the only way cap-and-trade will work in lowering energy demand and lowering our carbon emissions is by raising the prices on dirty energy, that’s going to happen anyway.  And my worry is you have quite a big bureaucracy you could end up with under cap-and-trade and a kind of centralized, there’s a centralized planning aspect to it that I worry about when if it’s going to be politically tough to enact this anyway, why not make the case for higher fuel taxes and carbon taxes and use that to actually offset other taxes.  It’s a little bit like the tax [swap] we were talking about earlier.  You could have a carbon tax and dividend scheme where you raise carbon, you raise energy prices to where you think they need to be to set in motion all the market incentives to create alternative energy, to reduce use of fossil fuels, etc., and give 90% of it back, let’s say, in lower payroll taxes to people.  Maybe the federal government would save a small portion of the revenue to invest and jumpstarting some of these alternative energies.  But there you have just a tax swap and I think you could explain that to people in ways that would be at least as politically feasible as the cap-and-trade which is going to have its own set of lobbying and political concerns anyway.  So, I’m definitely, I’m a carbon tax man as opposed to, I’m a carbon tax and dividend man as opposed to cap-and-trade.

The author sees an opportunity in a tax on carbon.

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