Tuesday, November 12, 2013

How the US could get a real (big) carbon tax

The Philippines has been hit by a very powerful storm. Thousands are dead and more will die, suffering will be extensive and long lasting. (Yes, poverty matters, but remember Katrina killed 1,500-3,500 and devastated a wealthy country city.)

Science-based thinkers expect a grim outlook for the Philippines. Sea level will rise, storms are likely to be more powerful, this will happen again even if many move away from the current crowded coastal zones.

Which makes this a good time to talk about a Carbon Tax. Not a trifling Carbon Tax, but a 'sell-the-SUV' and 'wear sweaters' and 'upgrade AC to smart adjust' carbon tax. A Carbon Tax that's politically impossible in 2013 China, USA, Australia, Canada or even Germany.

To be sure, a (Big) Carbon Tax (BCT) isn't about raising money for research - the funds would likely be offset by other tax reductions and by subsidies to people most hurt by cost shifts.. It's about keeping Carbon in the ground longer (maybe forever) by making extraction unprofitable, and accelerating transitions to low CO2 technologies (esp. solar, smart tech energy, etc) by making them cost-competitive ten years sooner than expected.

Nice idea, but impossible.

Except ... things change. Warfare happens. India suffers, and declares if it's going down it will take wealth western cities with it. Massive rogue geo-engineering projects have nasty side-effects that lead to more war, more threats.

Maybe a BCT becomes more palatable. Here's how it might happen -- the key is Border Tax Adjustment - "... import fees levied by carbon-taxing countries on goods manufactured in non-carbon-taxing countries...".

So what happens is China, India and Germany commit to a BCT -- for reasons of self-preservation and economic advantage. They tax American goods and services with the Border Tax Adjustment. The US can either suffer this or can add its own Big Carbon Tax -- and put various compensatory tax reductions/subsidies in place. The BTA goes away, the money stays in the US.

Once you have China, India, Germany and the US the rest of the world falls in line.

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