Although there is no mention of a carbon tax in the recently released GOP blueprint for tax reform, there had been the familiar chatter of a "grand bargain" wherein Democrats get a carbon tax and Republicans get corporate income tax relief. For example, Edward Kleinbard wrote such an article for the Wall Street Journal earlier in the week.
Because this issue will no doubt continue resurfacing, it's important to expose the flaws in Kleinbard's case. He simply ignores the political impossibility of his proposal: why would Democrats agree to a massive new tax falling on poor people, in order to fund tax cuts for corporations? Furthermore, why do we need a "revenue neutral" tax reform plan? As I'll show, federal spending and taxation are both at relatively high levels, historically speaking. If policymakers want to reduce the deficit, they should trim their budgets, not enact a massive new tax on energy and transportation.
