Opinion

Congress’ Newest Carbon Tax Proposal Is the Wrong Approach

Advocates of the carbon tax claim it isn’t like those other bad taxes. It’s “market driven,” they say. It will actually help the economy. And it’s a great way to reduce dangerous emissions. If Americans only understood how great this tax was, they’d be clamoring to have one imposed on them.

That’s exactly what supporters of the Energy Innovation and Carbon Dividend Act — a bill introduced by Florida Democrat Ted Deutch with a dab of bipartisan support — are claiming.

They are wrong on all counts, and most Americans — those who would have to pay the tax — know it. That’s why voters in green Washington state have rejected a carbon tax in two straight elections.

Like any tax, a carbon tax represents government intrusion into the private sector. It distorts the economy and, ultimately, falls heaviest on the backs of those least able to afford it.

Abundant, affordable and reliable energy is a key driver of prosperity and an essential element of our existence. It allows us the means to get to work, start businesses and produce goods and services — all of which we need to create value for others in a society of mutual benefit.

A carbon tax is an effort by politicians to restrict energy use in the same way soda taxes seek to micromanage our lives by discouraging sugary drink consumption. But energy use is a necessary component of productivity, growth and innovation. Why would we want to discourage those?

Additionally, companies hit with the tax will need to pass on some of the increased costs to the consumer just to stay afloat or cut back on jobs and investment. According to one study, a $25 per ton carbon tax would cost a family of four $1,900 per year, increase gas prices by 50 cents per gallon, and cost the economy more than 1 million jobs.

Previous carbon tax proposals have varied in the burdens they impose on the American people: Rep. Carlos Curbelo’s plan called for $24 per ton, and Sen. Sheldon Whitehouse’s plan called for $49 per ton.

The Deutch proposal is the most draconian and deceptive of them all. Its seemingly lower carbon tax rate of $15 per ton in 2019 masks its $10-a-year increases — rising to nearly $100 per ton by 2030. The tax could be even higher if the emissions targets stipulated in the bill are not met.

If you think the effects of a $25 tax is bad, multiply its effects several times over.

Because energy is a component of virtually all goods and services, millions of Americans would pay more for food, clothes, appliances, utilities and transportation. That means less money to spend for your family and less money for business owners to expand and innovate.

Even without a carbon tax, about a third of U.S. households had trouble paying energy bills or sustaining adequate heating and cooling in their homes in 2015, and 25 million households reported forgoing food and medicine to pay energy bills. A carbon tax would only make it harder to get affordable energy.

Even worse, the bill would empower the government to do what it should not do: pick winners and losers. It would provide a massive exemption for the agricultural industry, a blatant bit of corporate welfare that blows a hole in the pretense that the bill is simply about reducing carbon emissions.

A carbon tax would be another government-imposed barrier to the innovation needed to produce cleaner, lower-cost energy. It represents yet another power grab by the government at the expense of taxpayers. Even the enviro-friendly voters of Washington state understood this. Lawmakers in Washington, D.C., should not waste time on a bad idea like the carbon tax.

 

Martin Rodriguez is a policy analyst at Americans for Prosperity.

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