Revenue Neutral

One of the big knocks on increasing the cost of emitting carbon as a solution to global warming is that it’s “regressive,” i.e., it hurts the poor disproportionately. I don’t really buy that argument, for a number of reasons. One, the poor are going to be hit the worst by climate change, which will make food more expensive and flood low-lying countries like Bangledesh. Two, the poor don’t lead nearly the carbon-intensive lifestyle that the rich do. Sure the rich can afford a new Prius, but they also fly WAY more than working class people, for example, and tend to have bigger houses, etc.

Be that as it may, the political argument seems to have legs. And the last thing we need is for a bunch of hypocritical Republicans using this issue as a way to express faux solidarity with the working man (remember “Drill, baby, drill!”?). So the issue is how do you increase the costs of carbon without it looking regressive.

Needless to say, Barack Obama has an answer:

Mr. Obama will also propose in the budget outline he releases on Thursday to use revenues from the centerpiece of his environmental policy — a plan under which companies will have to purchase permits to exceed pollution emission caps — to pay for an extension of a two-year tax credit that benefits low and middle-income people.
The combined effect of the two proposals, on top of Mr. Obama’s existing plan to roll back the Bush-era income tax reductions on upper-income households, would be a pronounced move to redistribute wealth and reimpose a substantially larger share of the tax burden on the most affluent taxpayers.

Well played, sir.


One thought on “Revenue Neutral”

  1. Politically it is tricky. Penalizing polluters sounds all find and dandy, until the energy companies ostensibly doing the polluting pass on these costs to their customers, i.e. all of us. Then you are left with a pretty spot on claim that “Obama raised your energy rates”. Obama’s ploy to raise taxes on the >$250k/year crowd and use the dough as a rebate of sorts to cover the sudden rise of energy costs works in theory, but what happens with the tax increases (and related rebates) when the energy companies invest and implement the technologies to become cleaner? And the money raised through cap/trade diminishes as efficiencies improve? Obviously this is the end goal (cleaner energy), but wouldn’t those intended consequences eventually expose a massive whole in funding?

    I’m not against this per se, I’m just having a hard time getting my head around how it wouldn’t guarantee every backer getting voted out of office upon re-election time.

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