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A Carbon Tax in 2011 for Fiscal Conservatives?

The tax can be revenue-neutral if the money raised is returned to citizens by reducing other taxes

By Elizabeth McGowan

Dec 13, 2010

WASHINGTON—The grassroots side of Charles Komanoff wasn’t exactly dancing in the streets of New York City Nov. 2 when Republicans drop-kicked Democrats from their majority perch in the House of Representatives.

But the number-crunching, energy-policy-geek part of him sniffs an unusual opportunity for his beloved carbon tax to gain traction on Capitol Hill.

“Maybe this is totally wishful thinking, but one possible halcyon effect of Tea Party ascendancy might provide greater latitude for Congress and its ability to tolerate real mavericks instead of phony mavericks,” the 63-year-old founder of the Carbon Tax Center told SolveClimate News in an interview.

Komanoff’s “Exhibit A” is Democratic Rep. John Larson of Connecticut.

The congressman, elected to a seventh term, has written one of several carbon tax bills elbowed aside by what emerged as the bully of the Hill—a failed cap-and-trade measure. When the 112th Congress convenes in January, Larson has vowed to reintroduce a proposal he rolled out in 2009.

Komanoff isn’t optimistic that Congress has the fortitude to craft legislation to curb heat-trapping gases in the two years prior to a presidential election. But he’s hopeful legislators can at least kick the tires on a carbon tax during a round of congressional hearings.

That potential is motivating him and fellow advocates to bump up an education campaign, expand grassroots support and convince the mainstream environmental movement to join their cause. Their effort was galvanized during Nov. 19-21 at Wesleyan University in Connecticut.

“We are really in this for the long haul,” notes Komanoff, a Harvard-educated economist and policy analyst who still circulates a Washington Post opinion piece he wrote in 1989 outlining the merits of a carbon tax. “We’re focusing our efforts on planting the seeds to make it possible to have meaningful carbon legislation.”

What Makes a Carbon Tax Palatable?

During the midterm elections campaign, Republicans slammed the cap-and-trade approach to restricting emissions of greenhouse gases as “cap and tax.” But Democrats and more leftist environmental organizations also raised a stink about the American Clean Energy and Security Act the House passed in June 2009.

They criticized it as executing carbon trading behind the public’s back because it was too complex, too reliant on a topsy-turvy Wall Street and too cozy with well-connected energy interests.

“I’m a trained economist and it took me months to understand the merits of cap and trade,” Komanoff says. “If it was so difficult for me to grasp, how would it be for the average American?”

Supporters praise a carbon tax as simple to understand and easy to implement. They say polluters will reform their dirty habits when they are forced to pay steeper amounts every year for each ton of carbon dioxide they emit. What appeals to fiscal conservatives is the idea that the tax can be revenue-neutral if the money raised is returned to citizens by reducing other taxes.

“Early on, I was captivated by the principle of having energy prices tell the truth about the cost of energy,” Komanoff stresses. “That is as essential a step for successful energy policy as there is.”

Putting a price on carbon, he says, will emphasize how expensive the fossil fuels status quo is. That will motivate operators of power plants and factories, as well as the average American to lead a clean technology revolution.

Daphne Wysham, a fellow at the Washington-based Institute for Policy Studies who studies energy issues, said in an interview that she understands the appeal of a carbon tax.

“We do have an interesting array of organizations from the left and the right saying a carbon tax is much better than cap and trade,” Wysham says. “I think a payroll tax shift is one possible approach that could work. In this current economic climate, it may stimulate employers to hire more people. And if a dividend was being returned to people, it would be even more palatable.”

Honing the Security Argument

I strongly beleive that a

I strongly beleive that a revenue-neutral carbon tax could be a political winner. A carbon tax that's simple, transparent, and easy to administer is vocally supported by the majority of leading economists, scientists and opinion leaders and, I believe, would be supported by a well-educated electorate as well.  Moreover, the revenues from this approach can be recycled in tax relief for American families, making it politically attractive to members on both sides of the aisle.

Cross-Aisle Appeal of Carbon Tax

The Carbon Tax should be attractive to folks on both sides of that aisle. But how can it be attractive to those who want carbon fuels to be ever more massively consumed and, as a result of that desire, refuse to acknowledge any need for what the Carbon Tax (or Cap'n Trade, for that matter) are designed to do?

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