Traverse City Record-Eagle

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April 20, 2014

Forum: Time for revenue-neutral carbon tax

The U.S. Department of Defense, NASA, the American Medical Association, General Motors, the Catholic Church, Snowsports Industries America. What do they have in common? They all see climate change as a serious risk.

The Department of Defense describes it as a “threat multiplier” and the Vatican stated we must “reduce worldwide carbon dioxide emissions without delay using all means possible.”

Experts agree that if we swiftly enact policies to reduce emissions, we can avoid major climate disruption. Importantly, we can do so without breaking the bank. An efficient free-market approach supported by economists across the political spectrum is a revenue-neutral carbon tax. Here’s how it works:

n A tax is charged on fossil fuels at the oil/natural gas well, coal mine, or port of entry to the U.S. and paid by the corporations extracting or importing the fuel (e.g., Exxon Mobil). The tax increases annually so clean energy is competitive with fossil fuels within 10 years.

n American businesses will be protected by a tariff imposed on goods imported from nations without similar carbon-pricing.

n The tax is collected by the Treasury Department, goes into a trust fund, and is rebated 100 percent to American households.

n Equal monthly per-person rebates are made to each adult 18 years and older in a household (a half payment per child under 18, with a limit of two children per household). For most families, this additional income will offset increased energy costs. For those who make smart energy choices, it may also mean money in the bank.

Placing a predictably increasing tax on fossil fuels will send a clear market signal encouraging investment and innovation in clean energy. That’s good news for the job market - a University of Massachusetts study estimated that 16.7 jobs are created for every $1 million invested in clean energy, compared to 5.3 for fossil fuel energy.

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