The WSJ recently discussed the Niskanen Center, a new libertarian think tank named after economist William Niskanen. What sets the Niskanen Center apart from similar organizations is its advocacy of a carbon “tax swap” deal, hoping to unify Democrats and Republicans with a package that helps the environment and the economy by using the new revenues to reduce corporate taxes. Yet this is a baffling position, because Niskanen was a pioneer in Public Choice theory, which shows that the blackboard models of a carbon tax swap cannot be trusted. Even though Niskanen himself never addressed the specific topic (to my knowledge), the most obvious takeaway from his scholarly work is that a new carbon tax will hardly be “revenue neutral.”
