I also note that many of the problems we face, from climate change to pesticides to habitat destruction, come down to the externalized costs of human efforts to extract fossil fuels as fast as possible.
In light of this, I ask, is there a way to craft and promote a piece of legislation which would restructure the US economy, moving us away from fossil fuels, in a way that speaks to the majority of citizens and leaders, without changing their opinions or worldviews? I think it is possible, if not easy, and could proceed from the principle of “a spoonful of honey makes the medicine go down”. Further, society’s current feeling of desperation on the economy and unemployment could present an opportunity to do something bold. Could we come up with a game-changing proposal that can be described in one sentence, and which would elicit an immediate thumbs-up from 90% of the population?
The gist of my idea is, create a simple federal tax on carbon, and use it to replace payroll taxes, along with personal & corporate income taxes.
Reducing payroll taxes has already been proposed by Obama with the idea of spurring job creation. Eliminating personal and corporate taxes would presumably appeal to nearly everyone from Main St to Wall St. I see two basic challenges: dealing with regressive effects, and addressing the long-term revenue (as fossil use dwindles). You could implement assistance programs to help people like farmers and low-income workers with long commutes to adapt to the newly high cost of energy. Over a period of decades, the carbon tax could be gradually converted over to a general sales tax to deal with the problem of decreasing tax revenue. A third issue is convincing people that the carbon tax itself is a good thing. I think you could market this as a new Apollo-style project to “win the race to a clean 21st century economy”. The mood of the country seems to be leaning pretty libertarian these days, and I think you could, judo-style, use this momentum in favor of a tax-shift proposal that uses market signals throughout the economy to effect change, rather than prescriptive government interventions.
I guess the biggest objection to this kind of approach is “it’s too radical”, but maybe if enough popular support got behind it? Obviously, more research would need to be done to understand how this would play out on the utility bill and gas prices (likely doubled or tripled) and the grocery store receipts, but I am curious what people think about this type of strategy.
Joe Nolan
Rich 
Tim Lillard 
Ella Kondrat 
From Joe Gagnon: Well, it’s worth thinking about. Most of the advocacy for a carbon tax that I have seen proposes to use the revenues as a rebate to taxpayers to offset their increased energy costs. Using it in lieu of other taxes amounts to the same thing, but it might feel different. That might make it easier to sell.
The biggest problem that I can see with the carbon tax would be its effect on our global competitiveness in the short run. If we internalize the environmental costs and the rest of the world does not, our costs of production will be higher. That can’t be good for jobs. However, since there are many other countries besides our own facing fiscal crisis and recession, some real leadership might move us toward a new world order in which a carbon tax could be simultaneously adopted globally. A new trading block could be launched consisting of countries willing to commit to a carbon tax, with the unwilling excluded or subject to tariffs to create a level playing field.