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Tax would raise costs on almost everything else

Tax would raise costs on almost everything else

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Did you enjoy $3 a gallon gasoline last summer? Some members of Congress have plans for a carbon tax that will get you even higher prices.

By taxing the carbon content of fuels, they hope to steer Americans toward smaller cars, mass transit and city living, and away from SUVs, highways and suburbs.

This is an astonishingly bad idea, one that will harm the economy while hitting the poor the hardest. When you think about it, a tax on transportation is a tax on everything.

A key reason for our economic success is that Americans have access to a broad market for the things we need and the products we make. The logistics revolution of the past 20 years - centered on innovations such as "just in time" production - reduced manufacturers' costs and contributed to our prosperity.

Because our food, clothes and the materials with which we build our homes are drawn from this national market, a tax on fuels is a tax on everything. Raising taxes on everything we buy is a quick way to sicken our economy.

Of course, if carbon-tax supporters were proposing a national tax on everything, they'd be laughed out of town as soon as they opened their mouths.

Every can of food, every book and every piece of clothing that you buy that wasn't raised next to the store where it was sold will cost more with a carbon tax.

The only difference from an explicit "tax on everything" is that a carbon tax would be hidden, embedded in the price of everything you bought.

There are three kinds of taxes: Progressive taxes, such as our income tax's rising rates for higher incomes, take a larger proportional bite from the rich than from the poor. Flat taxes take the same proportion from everyone. Regressive taxes take a higher proportion of the income of the poor than of the rich. Tax experts debate the relative merits of flat and progressive taxes but there is no case for regressive taxes.

A carbon tax would be regressive because poorer people spend a higher proportion of their incomes on energy-related products.

On average, families making between $10,000 and $30,000 a year spend 10 percent of their income on energy while families making more than $50,000 spend 3 percent. Taxing the poor more than the rich is not just economically dumb, it's morally wrong.

And finally, Congress isn't smart enough to tax carbon.

Carbon tax proponents argue that people buy less of things that cost more. If carbon emissions harm the environment, tax enthusiasts reason that they can get people to emit less carbon by raising the price through a tax. Carbon-tax enthusiasts are vague about how much of a tax to impose. That detail matters a great deal.

How much harm does releasing the carbon in a gallon of gasoline cause? No one knows and no one seriously believes an accurate assessment is possible.

Set the tax too high and we'll use too little of carbon-based fuels; too low and we'll use too much.

We've tried allowing politicians to set energy prices before.

The energy price controls of the 1970s produced long lines at gasoline stations, natural gas shortages and Jimmy Carter in a cardigan. We can't afford any of those experiences again.

Carbon emissions may be bad for the environment. If they are, cutting carbon emissions is not something to be done on the backs of the poor through a regressive tax nor should it be done by sending the economy into a tailspin through a tax on everything.


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