Some Conservatives are Pushing for Carbon Tax Swaps

Published August 11, 2012

Carbon taxes have reentered the political discussion amid reports former Congressman Bob Inglis (R-SC) is building support for a carbon tax swap that would eliminate subsidies for all energy companies, tax all fuels based on carbon emitted during combustion, and refund the additional revenue to taxpayers by cutting taxes on savings and investment.

The idea has been endorsed by economists from both sides of the political aisle, from Arthur Laffer on the right to Joseph Stiglitz on the left.

Inglis, whose record as Congressman earned him a 93 out of 100 American Conservative Union rating, has stated, “Conservatives have the answer to our energy and climate challenge.”

Inglis continues, “It’s about correcting market distortions and setting the economics right. We need to stop retreating in denial and start stepping forward in the competition of ideas.”

Think Tank Scrutiny

Last month, Myron Ebell, director of the Center for Energy and Environment at the Competitive Enterprise Institute, sent out an alert to free-market allies concerning the American Enterprise Institute, another conservative organization, having hosted a secret meeting with some liberal groups to coordinate a push for a carbon tax.

Reports of the meeting sparked an immediate backlash. But when asked about the meeting, AEI President Arthur Brooks denied his organization is responsible for any formal push for a carbon tax.

“It was a meeting that AEI didn’t organize, and we don’t take institutional positions,” Brooks told The Washington Times. “Our scholars are interested in all sides of this. The only scholar who has taken a position on it personally is Ken Green, and he’s against it. So we really haven’t gone very far down this road at all. Some other outside groups organized a meeting, and that’s basically all it was. It kind of got reported on as if it were an AEI initiative, but it wasn’t.”

Revenue Neutrality—or Tax Hike?

Laffer has declared he takes no position on the issue of manmade global warming, but he has backed up Inglis’s carbon tax swap initiative by saying dollar for dollar a carbon tax would be less destructive to economic activity than the current progressive income tax system.

However, Heartland Institute President Joe Bast questions the revenue neutrality of tax swaps and points out the proposal ignores the issue of government spending.

“In the history of taxation in the United States, it is difficult or perhaps impossible to find a new tax that has led to the elimination or permanent reduction of an existing tax. New sources of tax revenue invariably result in higher government spending.” Bast said.