Carbon Tax is Pointless and Inflationary

By Steve Milloy
November 14, 2012, Investor’s Business Daily

Climate alarmists hope that Hurricane Sandy and President Obama’s re-election will coerce panicky congressional Republicans into a “carbon tax” deal in 2013. But simple math shows the tax would have no effect other than an inflationary one.

A carbon tax would operate as a new sales tax on goods and services that are produced through or otherwise involve the burning of fossil fuels. You might pay the tax in your electric bill, at the gas pump or in the form of higher prices for other good and services.

The purpose of a carbon tax would be to penalize fossil fuel use in hopes of reducing carbon dioxide emissions, which have been hypothesized to cause global cooling (1970s), global warming (1980s-1990s), climate change (2000s) and extreme weather (2010s).

While higher prices for goods and services aren’t inherently evil, their merits must be judged by what consumers and society get in return. So let’s consider a carbon tax from a climatic perspective.

To give a carbon tax the maximum advantage in our analysis, we’ll assume that it would be totally successful in reducing U.S. carbon emissions — i.e., the U.S. emits no carbon dioxide whatsoever from fossil fuels. And let’s also imagine that this public policy wonder has this magical effect as of Jan. 1, 2013.

So what would be the climatic effect of immediately shutting down the fossil fuel-based U.S. economy?

Let’s assume that U.S. fossil fuel use results in 6 billion metric tons of carbon dioxide emitted into the atmosphere annually and that, of this amount, about 40% (2.4 billion tons) stays and accumulates in the atmosphere annually.

Atmospheric carbon dioxide is measured in parts per million and one part per million of carbon dioxide weighs approximately 7.81 billion metric tons. Simple division, then, shows that the U.S. might be adding at most approximately 0.31 parts per million to the atmosphere every year.

If the carbon tax could magically stop U.S. emissions entirely as of 2013, then by the year 2100, we would have avoided adding about 27 parts per million (0.31 x 87) of carbon dioxide to the atmosphere.

That may sound like a lot, but consider that the current level of carbon dioxide in the atmosphere is about 391 parts per million. The U.S. Environmental Protection Agency estimates that atmospheric carbon dioxide levels in the year 2100 could range from 450 parts per million (absolute global clampdown on greenhouse gas emissions by mid-century) to 950+ parts per million (no clampdown).

Either way, it’s plain to see that a savings of 27 parts per million over 87 years is trivial, particularly in comparison to its cost (shutting down the entire economy) and would make no meaningful climatic difference even if atmospheric carbon dioxide was the driver of global climate that the alarmists claim it is.

For further perspective, consider that 27 parts per million ago (i.e., 364 parts per million) was, temporally speaking, 1997 — since which time there has been no significant global warming, even according to the alarmists.

But remember we here have been fantasizing wildly about the effect of a carbon tax. No carbon tax enacted into law — even by an Obama-fearing 113th Congress — would come any where close to significantly reducing, much less stopping fossil fuel use in the U.S. anytime soon.

In reality, goods and services would simply be made to cost more. The atmosphere and climate would not be affected in any significant way. Consumer dollars would have less purchasing power — a phenomenon called inflation.

Sadly, some prominent conservative economists support a carbon tax.

Reagan economist Arthur Laffer would support a tax in exchange for a reduction in payroll or income taxes. Bush 43 economist Greg Mankiw supports a global tax. Douglas Holtz-Eakin, senior adviser to John McCain in 2008, wants a tax to provide the energy industry with regulatory “certainty.”

As smart as these guys may be, none of them has apparently done the simple math that shows a carbon tax is a policy futility that buys less than nothing.

Hurricane Sandy shows what life is like without fossil fuels; it’s not a reason to do away with them. President Obama doesn’t care about the realities of climate; for him and his kind, global warming is an excuse to seize greater control of the economy. As to congressional Republicans, don’t panic; do the (simple) math.

Milloy publishes and is author of “Green Hell: How Environmentalists Plan to Control Your Life and What You Can Do to Stop Them” (Regnery 2009).

15 thoughts on “Carbon Tax is Pointless and Inflationary”

  1. I think what is funny is that if a carbon tax is implemented and it raises your utility bills, you’ll see more people turning to burning wood to supplement their heating. This phenomenon is being seen in Greece this winter – heating oil is too expensive for the average person so homes are turning to wood.

  2. All of this is very interesting, but it bothers me is that none of it was raised during the election. I’m Canadian. We had an election in 2008 in which the #1 item in the Liberals platform was a proposed carbon tax. It was discussed all over the country by candidates running for office. The result was the greatest election defeat that the Liberals had ever suffered. I voted against it; most voters did.
    However, I respect the Liberal leader because he told voters what he planned to do if elected. Voters deserve a choice about something as major as a tax on everything..
    This time, in the US, it’s entirely different. The Republicans certainly did not run on a platform of a carbon tax. It seemed to me that Obama looked very uncomfortable whenever his environmental rhetoric was raised. (Romney once ridiculed him for his pledge 4 years ago to lower rising sea levels, heal the planet, and Obama looked utterly embarrassed by it).
    My interpretation is that the politicians know that the American people are certainly NOT supportive of any of this. Of course, I may be wrong.
    But if either party wanted to introduce a carbon tax, had any reason to think that the American people might support it, why didn’t they inform the American voters about it, let them decide?
    Instead they gave them a year of campaigning, studiously avoided any reference to this. Now the election is over, and within a week the politicians are behind closed doors, discussing whether to implement a carbon tax.
    Is this how democracy is supposed to work?

  3. This is a leap in magnitude in the partnership of junk science and government: Relentlessly demagogue a key activity as a vice, then introduce the tax on the activity as necessary for economic reasons. With idiots that think a global punitive tax for undefined reasons and real defects or think that a tax where none existed produces regulatory certainty, who needs the left? I will win the lottery long before they repeal motor fuel or other taxes in the exchange, but with the help of the media, a carbon tax or similar revenue invention looks certain at some point in the near future. And they won’t stop there.

    It won’t solve any deficit problems either. A sytem of governments that justifies taking with the presumption that more governing is both necessary and better will ultimiately destroy what it doesn’t take. And junk science will play a big part.

  4. John Marshall, the statement was, “Let’s assume that U.S. fossil fuel use results in 6 billion metric tons of carbon dioxide emitted into the atmosphere annually and that, of this amount, about 40% (2.4 billion tons) stays and accumulates in the atmosphere annually.” This hypothetical assumption was part of the argument against a carbon tax based on the complete lack of utility of such a tax for any reason other than generating revenue. Your opening comment, “Your claim that CO2 produced from fossil fuels ‘stays and accumulates in the atmosphere’ flies in the face of fact”, if true, corroborates Steve Milloy’s analysis.

  5. Alexander is correct. A tax that applies to most everyone, and at equal rates, is a fairer tax.

    Of course, this won’t be used to replace a market attacking, regressive tax. It will just be a new tax, and, as such, will be bad.

  6. Your claim that CO2 produced from fossil fuels ”stays and accumulates in the atmosphere” flies in the face of fact.
    When FF produced CO2 mixes in the atmosphere it is indistinguishable from any other CO2 out there. The annual CO2 budget, which is used by plants as food and dissolved in the oceans to replace that used by plants and animals for skeleton building blocks, has a small 3% portion from humans FF use. The rest, 97%, is naturally produced and the largest producer is due to sea water warming and caming out of solution as the latest research shows- the largest area for CO2 production is the southern hemisphere not as assumed the northern where all the industry is located producing FF derived CO2. If you drive your car through a forest it is highly likely that the CO2 from the car exhaust will be used immediately by a tree.

  7. Alexander Thesoso, what is much fairer about the carbon tax, when it is solely based on a fanciful ideology of AGW and on a “religion” of a nature-god Gaia and not based on sound business-practices? We here in Australia are now paying the 4th highest price for our electricity in the world, because the Green Party has blackmailed the Labor government in forcing “green energy” and the carbon tax on us. Although very generous tax-payers’ grants plus tax-breaks have been showered on electricity-providers, who decided to utilise that technology, they still lose money because of the great expense and inefficiency and pass their losses on to their consumers. To make it worse, the carbon tax has only made everything more expensive and this is clearly inflationary and because it is done through false assumptions and lies including a religion, it is corrupt and it is against our constitution, because our society is a secular one and religion should not be part of a government’s policy. But unfortunately, like your own President, our Prime Minister is a slave of the Green Movement.

  8. Let me suggest a contrary view:
    The words surrounding the carbon tax, and the concepts surrounding it are nonsense, but, the tax per-se is not necessarily pointless or inflationary.
    What is really inane are other programs to give away money for carbon credits.
    The carbon tax is simply a specific consumption tax on a generally used product. It brings money into the treasury. While not enjoyable, it is much fairer than many other taxes. If the raising of money is a point, then this tax (in fact, not in rhetoric) has one.
    Inflation is a monetary concept, and is the printing or creation of money without the creation of real wealth to support it. In this sense, the carbon tax is not inflationary. It is only if we confuse inflation with the cost of living that we can use the word inflationary for a consumption tax (increases cost of living, not money being created).

  9. I find it hard to believe that these “conservative economists” who support these ridiculous and unconstitutional taxes are actually “conservatives.” No conservative or logical minded individual should support such asinine taxes.

  10. Unfortunately, I think the alarmists have won the “debate” through scare and misinformation. A recent Rassmussen poll of voters indicated that 68% thought that global warming was a problem.

  11. Is fraudulent extortion no longer a criminal offence?
    It was established, years ago, in the British High Court, that Al Gore reversed the science of the ice cores, which show that rising global temperatures are followed 800 – 2,000 years later by identical rises in CO2 levels (the gradual warming of the oceans).
    Logic suggests that the CO2 levels of today are the product of the global temperatures that prevailed 800 – 2000 years ago. The Medieval Warm Period?

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