Do you know of any studies that try to quantify the elasticity of co2 emissions? In particular, I’m interested in how much co2 emissions would be reduced by a carbon tax. And I would imagine that past changes in prices caused by factors other than taxes can help us estimate this.
The reason this seems important to me is that the only reliable effect of a Pigouvian tax is its effect on consumption. We can hope that the government will then use the money they collect in order to correct the externalities. But I think that’s all we have on that front: hope. This seems even more true when the timeline spans many generations, many governmental administrations, and many crises that inspire profligate spending. How wrong am I on this front? Do you think there is a way to ensure that taxes collected today will be used as intended in a hundred years? Fifty years? Twenty five years?
(Para 1) There are definitely studies on the potential co2 emissions reductions from a carbon tax. The consensus among economists (incl. conservative/republican ones) that the policy would work as intended is pretty unanimous. The challenge is getting the electorate behind it, because it makes driving, meat, and other carbon-intensive stuff more expensive.
(Para 2) The pigouvian tax reduces consumption of things that are intensive in co2 emissions by making them relatively more expensive. Regardless of what you do with the tax revenue, the carbon tax reduces co2 emissions by reallocating consumption and investment and human activity generally to less carbon intense goods and services.
What you ultimately do with the carbon tax revenue is a separate question. Mostly, this will just fund the federal budget. Then then question becomes, how do we make sure that government spending is good? That's a complex question that essentially boils down to democracy, democratic accountability, democratic institutions, political parties, etc. It's a good question, but it also applies to sales tax revenue, personal income tax, corporate income tax, and all other taxes. Carbon taxes don't need to be 'earmarked' for certain kinds of spending.
Ah I see. So the intention is for the carbon tax to affect carbon emissions through its effect on consumption. And the consensus among economist is that its effect on consumption alone would be enough for it to work as intended?
Well, other taxes are not explicitly justified as an internalization of negative externalities. They're justified, I suppose, by the government's need and force. Mostly its force. And what's the point in arguing that?
Potentially, talk of negative externalities and their internalization is not good marketing because it inspires this line of thinking: "If I'm paying for the damage I'm causing the environment, what is the government doing to restore the damage done?" That's a good question to ask. But I think in the case of a carbon tax the answer is basically nothing. Nothing believably effective at least.
At the risk of being overly mathematical, I'll say it seems to me that if the effect on consumption is what the government is after, a carbon subsidy, say, on plant based meat substitutes, ought to achieve a similar result as a carbon tax on meat. I want to say that a subsidy would be more popular, but that'll depend on how privy voters are to the fact that a subsidy is pretty much the dual of a tax.
Do you know of any studies that try to quantify the elasticity of co2 emissions? In particular, I’m interested in how much co2 emissions would be reduced by a carbon tax. And I would imagine that past changes in prices caused by factors other than taxes can help us estimate this.
The reason this seems important to me is that the only reliable effect of a Pigouvian tax is its effect on consumption. We can hope that the government will then use the money they collect in order to correct the externalities. But I think that’s all we have on that front: hope. This seems even more true when the timeline spans many generations, many governmental administrations, and many crises that inspire profligate spending. How wrong am I on this front? Do you think there is a way to ensure that taxes collected today will be used as intended in a hundred years? Fifty years? Twenty five years?
(Para 1) There are definitely studies on the potential co2 emissions reductions from a carbon tax. The consensus among economists (incl. conservative/republican ones) that the policy would work as intended is pretty unanimous. The challenge is getting the electorate behind it, because it makes driving, meat, and other carbon-intensive stuff more expensive.
(Para 2) The pigouvian tax reduces consumption of things that are intensive in co2 emissions by making them relatively more expensive. Regardless of what you do with the tax revenue, the carbon tax reduces co2 emissions by reallocating consumption and investment and human activity generally to less carbon intense goods and services.
What you ultimately do with the carbon tax revenue is a separate question. Mostly, this will just fund the federal budget. Then then question becomes, how do we make sure that government spending is good? That's a complex question that essentially boils down to democracy, democratic accountability, democratic institutions, political parties, etc. It's a good question, but it also applies to sales tax revenue, personal income tax, corporate income tax, and all other taxes. Carbon taxes don't need to be 'earmarked' for certain kinds of spending.
Ah I see. So the intention is for the carbon tax to affect carbon emissions through its effect on consumption. And the consensus among economist is that its effect on consumption alone would be enough for it to work as intended?
Well, other taxes are not explicitly justified as an internalization of negative externalities. They're justified, I suppose, by the government's need and force. Mostly its force. And what's the point in arguing that?
Potentially, talk of negative externalities and their internalization is not good marketing because it inspires this line of thinking: "If I'm paying for the damage I'm causing the environment, what is the government doing to restore the damage done?" That's a good question to ask. But I think in the case of a carbon tax the answer is basically nothing. Nothing believably effective at least.
At the risk of being overly mathematical, I'll say it seems to me that if the effect on consumption is what the government is after, a carbon subsidy, say, on plant based meat substitutes, ought to achieve a similar result as a carbon tax on meat. I want to say that a subsidy would be more popular, but that'll depend on how privy voters are to the fact that a subsidy is pretty much the dual of a tax.