The Politics of a Carbon Tax

December 15, 2007

As much as people hate taxes, especially gasoline taxes, a carbon tax that is explicitly offset by another tax cut might be politically feasible, as long as it were explicitly presented as a package deal.

My proposal: no more social security taxes. We could have a dual measure in which we propose to eliminate the payroll tax while instituting a carbon tax. I’m sure some people would still try to use the carbon tax to political advantage, but I believe that if you could strongly emphasize the package nature of the deal, trading the payroll tax for a carbon tax, it would be harder to point to the carbon tax in isolation as a bad thing.

I haven’t actually looked at whether this proposal would be revenue neutral. If it would be, that’s probably fate telling us we need to do it.

If you are wondering about the connection between paying social security taxes and “getting your money back” when you retire, you will probably be interested to know that you have no right to your social security money. None at all.

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