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Monday, December 3, 2012

Carbon tax considerations [updated]

David Frum makes a case--and it's a powerful case--for taxing carbon. Unfortunately, there isn't currently an administration in place that's willing to take such a step (and unlike the recent Republican challenger, the president does not have economic advisors known for high-profile advocacy of a carbon tax).

I would emphasize a point David makes, which is a central insight of the recent book The Carbon Crunch (which I've only had a chance to skim so far), that a carbon tax must fall ultimately on consumption, not just production. In other words, it's futile and counterproductive to put a tax on a factory in one country that just encourages the company to move to a country without a carbon tax. Rather, goods must be taxed as they enter the importing country, if they're made someplace without the tax.

UPDATE: Bipartisan opposition in the House.

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