The right kind of carbon tax

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In my humble opinion, if lawmakers are serious about passing a carbon tax now, they better start calling it “Carbon”. Discount Plan “and underline that this is the alone deal on the table right now to help low-income families deal with soaring energy costs.

Senator Ron Wyden (a Democrat from Oregon) Recount The New York Times, he has a carbon tax bill on his desk “for three years, just waiting for the [right] time. A period of soaring fossil fuel costs would normally not seem like the right time. It would sound pretty crazy, actually.

So why now? Mainly because the Democrats’ $ 3.5 trillion bill is in serious jeopardy for lack of sufficient support, as consumers feel the bite of soaring food and gas prices and fear that DC’s extra spending will make matters worse. . Today, lawmakers are trying to “reduce the original bill to about $ 2 trillion”, a figure that is still huge. But that puts key points on Biden’s agenda like “the clean electricity program” on the chopping block, especially after Sen. Joe Manchin (a Democrat –for the moment–from West Virginia) spoke out against it last week.

Plan B, according to the Times, is a tax on carbon emissions. The right kind of carbon tax is like the one Senator Wyden is proposing – a revenue neutral option that sends the money collected through the tax to the households most affected, instead of using it to fund more. other government programs. “An important part of politics … reported the Times.

And here is Senator Wyden’s key quote: “You have to show workers and families, when there is an economy in transition, that they will get their money back …”They will be made whole. ”

Just look at what soaring costs are already doing to American consumers. “High income buyers plan to spend 15% more than last year,” says Deloitte investigation found yesterday. “But lower income groups plan to spend 22% less.” And in fact, some of these households do not spend at all this season. Google searches for payday loans and cash advances are to pick up.

Low-income households have triple the energy load as do the richest, nearly 9% of income against 3%, and in some cases up to 30% of income depending on where they live. And by the way, “low income” describes 44% of American households, or some 50 million people. Higher food costs work in exactly the same (regressive) way.

On the contrary, the rising costs of food and energy itself could justify some sort of targeted tax break this year, no matter what else is happening on Capitol Hill. I wouldn’t be surprised if a lot of the child tax cuts end up paying these bills. And since then, as I have argued, we basically ended up with an effective carbon tax without discount right now, it could actually be the perfect time to formalize the program, but with discounts as a central element to protect the most vulnerable households.

I think the public feels more urgent in pushing forward a clean energy agenda now than the last decade, as long as it’s done in a reasonable way (and the Wyden carbon tax would apparently start at a pretty low amount, around $ 15-18 per ton). The rise of electric vehicles and the fall in the cost of renewable energies are also helping to galvanize capital in this direction. States like Virginia and Illinois are moving towards “net zero” emissions targets anyway. And why else could Exxon to give up its future most emitting fossil fuel projects at a time when prices are soaring?

We do not need a national carbon tax for the energy transition to continue. But we to do need a safety net for those who pay the price.

See you at 1 p.m.!

Kelly

Twitter: @KellyCNBC

Instagram: @realkellyevans


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