Carbon tax versus income tax.

I’m going to write about a subject within the realm of economics today. It’s not a world that I particularly feel comfortable with. It’s certainly not something that I have studied in great detail, even in my economics course in college. The lessons there went in one ear and out the other by the time the semester was over. Then again, when the teacher made every test open notebook, and told us exactly what the test was going to be ahead of time, I somehow doubt that I would have retained too much of the subject. But as usual I heard something somewhere, and it got me thinking. My blog posts usually tend to be reactionary as opposed to research papers anyway, so I shouldn’t feel too weird about it. But as this is really something that I don’t have a lot of experience with, I felt that I should have started with a preface of caution this time.

I was listening to the latest podcast of “This American Life” today, which was about global warming. At one point a politician was talking about introducing the carbon tax, and to appeal to the conservatives (of which he was one) he said we could balance this out by cutting the income tax. This is an idea that I can get behind, even though I don’t normally like his politics. First, let me make a point about income tax. Even if I don’t agree in the government we have or capitalism, I agree that if we’re going to have a democratic republic in a capitalistic society we’re going to need taxes. This is especially true if we’re going to need to fund what little socialistic programs we have left. However, we need to be more careful about what we tax.

If they want to have taxes on alcohol and cigarettes, fine. I’m willing to pay a little extra on my beer in order to help somebody who needs welfare. Those are items people voluntarily buy, but they buy it often, and the guilt trip can be an effective way to convince them to pay taxes on those products. Likewise, if the government ever does the right thing and legalize other recreational drugs, those can be taxed even more heavily. With income tax, however, we don’t have that guilt trip. There are plenty of people out there that don’t want to work. Even with a tough job market, people don’t want to feel like they’re working in order to pay the taxes on the work that they’re doing. They should reap the rewards of what they do.

With carbon tax, on the other hand, the whole idea is that people who generate too large a carbon footprint will be inspired to decrease emissions if they have to pay more for them. This may not seem like a trade-off, but there’s no way that we’re going to decrease carbon emissions that quickly to offset what we’re losing on the income tax. I may not be prudent to make the decrease in income tax and the increase in the carbon tax match dollar for dollar. Here’s the point where I have to leave off the economics side of things as math is not my strong point.

By the way, you may be wondering why I’m supporting a carbon tax and decrease in carbon emissions when I’ve already mentioned my skepticism in global warming. I never said that I reject it completely, but that I’m just not convinced. I’m not one of those conservative politicians owned by oil companies that believes that it’s all a hoax. However I do think that there are too many environmentalists whose hearts are in the right place, but not their brains, and they go too far with their conclusions and actions. Nevertheless it’s still a theory that we should pay attention to. Besides, I refer to a famous cartoon that was originally published in USA Today:

It’s not exactly like we would be doing anything wrong by adapting greener methods of living. There’s plenty of benefits to the methods proposed even if it does turn out that global warming isn’t real, or as bad as we thought. Besides, with some of the cost-saving methods I’ve been using lately I’ve been living a little greener. I guess that raising prices do help. It seems that the old ways of living are getting expensive, and that may not be a bad thing.

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