Carbon Tax

Ideas should be judged by their quality, not their pedigree. I am not usually a fan of Republican tax policy proposals or environmental initiatives. But I strongly support the proposal put forward Wednesday by Republicans George Shultz, James Baker, Martin Feldstein, Hank Paulson, Greg Mankiw and others for a substantial carbon tax in the United States to address global climate change. Their proposal that the carbon tax be coupled with a mechanism for rebates to consumers, a rollback of command-and-control regulation, and a border adjustment mechanism is also sound.

The United States has a moral and a prudential obligation to lead on global climate change. There would be no clearer sign of our commitment than the introduction of a substantial carbon tax. Our adoption of a carbon tax would encourage others to follow. The border adjustment mechanism would be a further inducement since foreign countries would presumably prefer their carbon emitters pay them than pay us. And because a carbon tax is easy to change it would enable us to be responsive to new developments in the science of global climate change.

Some of my friends may not completely agree, but I think the replacement of command-and-control regulation with a carbon tax is a positive step.