Yes, a new carbon tax, if draconian enough, could ultimately force households and businesses to sharply curtail their emissions. But doing so, especially quickly, would come at a huge cost in Americans' standard of living
In response to the recent pro-carbon tax letter to the Wall Street Journal signed by dozens of prominent economists, Tyler Cowen objected strongly to the "citizen dividend" aspect. Although Cowen is sympathetic to a carbon tax per se, he was alarmed that the economists in the WSJ were misleading readers:
Arguably [the lump-sum citizen dividend of carbon tax receipts] makes the policy seem less important, and mainly about the dividend, in a slightly cynical, Chavez-like sort of way. Furthermore, it tries to make a carbon tax a free lunch, which it is not, no matter how great the longer-term gains. I don't believe ineconomists tricking people , even though I will admit tricking people can be useful. The tricking is somebody else's job!
