Who Pays a Tax on Carbon? Rich or Poor?
|December 14, 2013||Posted by Staff under Economic Principles, Environmental|
A carbon tax would operate much like a diamond tax, for reasons both of demand and supply.
Demand: The wealthy actually consume a disproportionate amount of carbon. Discussions of a carbon tax usually focus on the price of gasoline — a significant cost to low-income commuters and small truckers. But the rich fly planes, including private jets; drive to low-density suburbs; occupy and heat multiple houses and hotels; and buy lots of stuff. Clearly the rich consume much more carbon per capita than the poor.
Supply: In the short run, it’s hard for people to cut energy consumption, especially if they must drive to work. But oil production takes decades and billions in capital investment; producers cannot quickly increase or decrease supply. Second, oil producers form an international cartel, an organized mega-monopoly, which holds down production to drive up prices. Since they’re already charging what the traffic will bear, they can’t much raise prices to cover a tax.
Because most of the tax falls on suppliers, it will generate plenty of revenue to help those unfortunate long-distance commuters and small truckers, to build more public transportation, to invest in renewable energy, and even to cut super-regressive taxes like the payroll tax.
Who owns the suppliers, anyway? According to Edward Wolff, in 2007, the top 1 percent in the U.S. owned 43 percent of non-home wealth, mostly securities, including of course energy company stocks and bonds. The top 10 percent of wealth holders owned 83 percent. The same folks who own DeBeers also own Exxon, Shell, and BP.
Ed. Notes: And if you want to really be sure that a tax on carbon spares the poor polluting a little and targets the rich polluting a lot, all you have to do is do what British Columbia do: they use some of the revenue raised by their carbon tax to fund a dividend to the lower income earners.
Besides using that payback to get a tax on emissions passed, you could also use it to pass a tax on extraction, even to pass a tax or fee on exclusion, on monopoly use or ownership of a location. Whether it’s the atmosphere, or buried resources, or desirable land, if you use it, you owe for it.
And while recovering these values of nature, ideally, at the same time government would quit taxing the values we do individually create, such as our income, purchases, and buildings. Reduced to a slogan of bumper sticker size: “Pay for what you take, not what you make.”