April 6, 2017

In Defense of Carbon Taxes: Manhattan Institute Edition



Back on February 2, Tax Notes (alas, behind a pay wall) published a piece by the Manhattan Institute’s Diana Furchtgott-Roth titled “A Carbon Tax is Still a Terrible Idea.” In the course of pushing back against the carbon tax plan recently forwarded by James Baker et al., she contended that a carbon tax would:

  • reduce economic growth;
  • prove regressive;
  • be riddled “with exemptions for friends and punishments for enemies”;
  • fail to emerge from the legislative process in a revenue-neutral fashion;
  • raise the price of U.S. goods relative to foreign goods, harming domestic manufacturers; and
  • have no real impact on global temperatures because no other large international emitters are willing to act.

The arguments she forwarded, although mostly specious, are often repeated by carbon tax opponents. Accordingly, Prof. Gary Lucas, Prof. Shi-Ling Hsu, and I thought her article merited a response in Tax Notes. You can find that response here.