We have to hand it to the Citizens’ Climate Lobby. When they didn’t succeed in getting a series of Flagstaff City Councils to support a carbon tax, they kept coming back.
And now, with a new council lineup in place since November, the carbon tax received unanimous support, even from the council’s free-market conservatives. Gone are the days when some councilmembers would refuse to consider as a waste of time any nonbinding, nonlocal issue – i.e., one not in the charter and therefore outside their legislative authority. Sometimes, that was a strategic move – why bite the hand in Phoenix politically that may someday come back to feed you? But Flagstaff as a city in the desert Southwest atop the semi-arid Colorado Plateau is on the front lines of climate change, and politically, a carbon tax is the closest thing to a bipartisan fix as the global warming debate will find.
Flagstaff joins more than 50 other cities passing similar resolutions even as the White House threatens to pull out of the 2015 Paris Accords that set targets for reduced carbon emissions and pool funds from advanced nations to help undeveloped ones switch away from coal.
But the White House is fast becoming irrelevant on global climate initiatives, and not just because Miss America, from North Dakota, of all places, won her crown in part by standing up to the president and telling him to do the right thing by the Accords and the planet.
The recent monster storms that many scientists are linking to warmer oceans heated by carbon-based greenhouses gases might be another factor in the drive toward carbon taxes. One former skeptic, noted Harvard economist Gregory Mankiw, is now not only on board the tax but worries that in its current form it might be too little too late. He is for tying the increase in the tax per ton of carbon to global temperatures and other warming indicators.
Other factors include new support from the big fossil fuel energy conglomerates like Exxon-Mobil. Theirs is a more pragmatic stance than a principled one: They now have a large investment in natural gas production that is replacing coal and crude oil and will give them a market advantage under a carbon tax regimen.
And pulling out of Paris will not stop other countries from not only enacting taxes based on the carbon content of certain products but applying them to U.S. imports, too, if this country does not tax those products first at their source. That will put U.S manufacturers at a disadvantage that even a subsequent trade war, which the White House has threatened, won’t entirely alleviate.
Caught in the middle would be U.S. consumers, who would not enjoy the protection the consumers in other Paris Accord countries would get from lower taxes on imported “carbon” goods.
And what about those consumers and small businesses if a carbon tax were passed at the source, then passed on in the form of higher gasoline prices and retail prices on products with steel, for example? The answer is that unlike a classic “sin” tax on, say, tobacco and alcohol that goes to offset harmful effects such as lung cancer or drunken driving, most of the price hikes under the carbon tax are rebated to consumers.
That raises the question of why consumers would change their buying habits because of higher prices if they are eventually reimbursed. But in places like British Columbia, where a steep gas tax was enacted, driving went down and purchases of electric vehicles went up compared with the rest of the country, even with modest rebates. The trick is setting not only the tax per ton of carbon at the correct level to influence a switch to nonrenewables but also the rebates correctly so that lower-income households, who have less choice of products, are fully reimbursed.
There is also a cost to administer the tax, but at least proponents, who include Republican luminaries like James Baker, have worked out enough details to be able to provide estimates of rebates at a fairly precise level. In Flagstaff, according to proponents in their presentation to the City Council, dividends would average $410 per four-person household in the first year and $2,900 by year 12. The market, say proponents, will work out a fair price more efficiently than any government bureaucrat setting emissions caps or mandating types of fuel use.
In contrast, consider the vague tax reform initiative being introduced by the White House or the single-payer health care plan touted by Democrats. The net winners and losers under tax reform have not been calculated, nor have how much higher taxes would be under single-payer than current insurance premiums. Had those proposals come up for a City Council endorsement, we would have sent proponents back to the drawing boards. But the Citizens’ Climate Lobby has done their homework, even if Congress and the White House haven’t.