Tax me, please!

[Carbon] tax is taboo in Washington, but now there's a place it dares speak its name: the Carbon Tax Center, which opened this week with the aim of becoming "the village square for civic and political conversations about the why, who, and how of taxing CO2 emissions in the U.S. and, eventually, the world." A Taboo Link, John Tierney - TierneyLab, NYT, 24JAN07

Why carbon taxes? Why a Carbon Tax Center?

Charging American businesses and individuals a price to emit carbon dioxide (CO2) is essential to reduce U.S. emissions quickly and steeply enough to prevent atmospheric concentrations of CO2 from reaching an irreversible tipping point. It’s a basic economic principle that prices of goods and services should reflect ("internalize" as the economists say) all of the societal costs (such as pollution) that production of the goods or services imposes on society. Yet the prices of gasoline, electricity and other fossil fuels don’t include many of these societal costs, particularly their impact on global warming. The necessary transformation of our fossil fuels-based energy system to reliance on energy efficiency, renewable energy and sustainable fuels simply won’t happen without carbon taxes sending accurate and powerful price signals into every corner of the economy and every aspect of life.

This principle is obvious to professional economists, familiar to most policy-makers, and understandable to citizens. Nevertheless, the forces arrayed against carbon taxes are many — not just fuel corporations with a massive stake in keeping the U.S. addicted to fossil fuels, but deep-seated assumptions such as faith that we can pull through with a mix of native ingenuity and advanced technology. (Washington Post columnist Sebastian Mallaby brilliantly dissected this myth in a 2006 column.) We would love to agree, but our long experience in the energy arena, including advocating for efficiency and renewables, convinces us that higher fuel prices, delivered via equitable, progressive carbon tax-shifting, will also be essential.

America needs a full and candid discussion of carbon taxing in the national arena and at the state and local levels as well. We have formed the Carbon Tax Center to advance this discussion. We are mindful of the difficulties of proposing new or increased taxes in the U.S. (Our insistence on progressive tax-shifting is partly a response to this difficulty, though it is also rooted in our determination to ensure that carbon taxes improve rather than set back equity in America.) CTC will provide intellectual and practical support, as well as a sense of community, to help carbon tax proponents in every region and across the political spectrum coalesce into an irresistible civic force.

That's the Carbon Tax Center's answer to the "Why?" question, and the rationale for this tax sure makes sense to me. Seems like a majority of the business and political leaders who attended the recently concluded World Economic Forum's annual meeting in Davos think so, too.