Eli Rabett’s: Dividend and Fee Carbon Taxes
February 14, 2019Eli has an idea. Usual disclaimers.
Let's have a dividend and fee carbon tax. Let's pay the first year dividend and only start to collect the fee in the second, and let's even give bonus' for good deeds, like riding public transport, not using neonicotinoids, giving more carrots to the bunnies and your suggestion goes here.
The Overton window on this is being shoved too and fro. On the one hand in the US there is a real shift in public opinion toward reality on climate change to it is real, and we must do something about it. The Green New Deal has a bunch of momentum going for it. On the other hand the French gilets jaunes have been raising holy hell in the streets of Paris.
Thus Eli Rabett's simple plan: Pay the first year dividend without collecting the tax. Institute the tax in the second year. Where will the money come from the bunnies ask. Well, think of it as the infrastructure week that the US did not have. It's an investment, and more will be needed for supporting research and new infrastructure like new nuclear plants and electrical distribution networks.
So back to the beginning. Fee and dividend was an idea popularized by Jim Hansen, the idea being that there would be a revenue neutral carbon tax with the revenue being returned to citizens. In the US this has been taken up by the Citizens Climate Lobby among others including a whole bunch of economists who argue for a carbon fee and dividend plan. CCL calls for a 100% monthly per person dividend and a border adjustment which would cover the carbon generated in the production and transport of imports. (Eli notes he was one of the first bunnies to talk about the border adjustment feature in the 2007 Eli Rabett's Simple Plan to Save the World).
Now one can argue about the correct costing for a carbon tax, but the general idea is clear and the point of the dividend is to capture the advantages of eliminating CO2 emissions while returning the fee to the public. Why return the fee, well, some high fees will be needed to get to zero emission, and people will not be happy with paying them (Pay no attention to the folks selling free beer). Thus pay the dividend up front, tax the carbon later. Everybody wins
