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Carbon Tax? What’s not to like? Well, how about inefficiency, ineffectiveness and counter productivity?

Tom Tanton
Director, Science & Technology Assessment

In an opinion piece in Monday’s LA Times, Doyle McManus touts a new carbon tax as something ‘everyone should love.’ Quite the contrary, it has something for everyone to hate. Put aside that a carbon tax is extremely regressive, hurts the poor most of all, the use of fossil fuels has increased life expectancy by double over the past 150 years, and that it favors cronyism. The worst part of a carbon tax is that it would achieve the exact opposite of what supporters claim.

One of the main “benefits” proponents of the tax claim are reductions in climate changing greenhouse gas emissions. Mr. McManus and others fail to acknowledge ‘leakage’ that would occur as the relative costs of the production of all U.S. goods increase as a result of such a tax. Leakage occurs when manufacturing and agricultural production move to locations, like China and South America, where the emissions of greenhouse gasses are higher than they are here, for each unit of production. From 2000 to 2010, the carbon dioxide intensity of the U.S. economy—measured as metric tons carbon dioxide equivalent (MTCO2e) emitted per million dollars of gross domestic product (GDP) — improved by over 17 percent or 1.7 percent per year. The decrease in U.S. CO2 emissions in 2009 resulted primarily from three factors: economic recession, a particularly hard-hit energy-intensive industries sector, and a large drop in the price of natural gas that caused fuel switching away from coal to natural gas, which further lowered our emissions intensity. Improvements occurred even in years of economic growth, not just recession.

The US emits more in aggregate simply because we make more. We are often criticized for emitting 20% of the global greenhouse gasses with only 5% of the population. Less often mentioned is that we’re responsible for 30% of the world’s GDP. In reality we feed, clothe and supply the world and are better at it than most.

The US is better on average than the rest of the world in terms of intensity, with but a few exceptions. Implementing a carbon tax will increase global emissions, by forcing businesses, manufacturing, and even agriculture activity outside the US, where emissions intensities are much worse, leading to net emissions increases.

A carbon tax would also impede President Obama’s call to increase exports to aid our economic recovery. The US will simply begin importing more goods we used to produce and grow domestically — cement from Mexico, food from South America, high tech devices from Asia- with a net increase in global emissions. Other countries will also simply import from places other than the US. That’s not what proponents of a carbon tax claim, but it’s what will result, and in the end emissions will increase.

 

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History and Founding Principles American Tradition Institute (ATI) is a public policy research and educational foundation - a "think tank" - founded in 2009 to help lead the national discussion about environmental issues, including air and water quality and regulation, responsible land use, natural resource management, energy development, property rights, and free-market principles of stewardship. American Tradition Institute utilizes a three-pronged strategy to advance responsible, economically sustainable environmental policy: Research, investigative journalism, and litigation, via our Environmental Law Center. Our combination of expert policy analysis, exposing truth, and redressing wrongs in court advances the cause of liberty, and will...

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