A carbon tax is likely far more damaging to the economy than conventional taxes
Murphy: Conservatives should rethink support for a carbon ‘tax swap’ deal
IER Senior Economist Robert Murphy published an op-ed today for FOX News about the economic damages of a carbon "tax swap" deal. In a recent study, Murphy demonstrates that current pro-carbon tax discussions offer a 'cure worse than the disease.'
"Many analysts, including some political conservatives, have endorsed a carbon "tax swap" deal in which the revenues from the new tax would be used to offset existing income or payroll taxes. However, in a new study I show that the economics literature suggests a carbon tax is likely far more damaging to the economy than conventional taxes.
What's worse, many proposals earmark carbon tax receipts for deficit reduction, meaning it would constitute a net tax increase on Americans.
Finally, standard models show that if the U.S. imposes a stiff new carbon tax without cooperation from other major governments--notably India and China--then the economic costs to the U.S. will be greatly amplified while potential environmental gains will be squandered."
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The Institute for Energy Research (IER) is a not-for-profit organization that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets. IER maintains that freely-functioning energy markets provide the most efficient and effective solutions to today’s global energy and environmental challenges and, as such, are critical to the well-being of individuals and society.