Monday Smackdown: Carbon Tax Revenue Reversal Department
Back in 2009, Greg Mankiw was opposed to any [carbon-tax/cap-and-trade] proposal that did not use "most" of the [revenue raised by the tax/money earned by auctioning the permits] to cut marginal tax rates.
Today Greg Mankiw is in favor of a carbon tax proposal that does not use any of the revenue raised to cut marginal tax rates.
There is no explanation of this shift.
The obvious explanation that would apply to most Republicans is this: Back in 2009 word had came down from the high councils of the Republican Party--Mitch McConnell and John Boehner--that the object was to make Barack Obama look like a loser, that until he had been rendered a one-term president even his best policies needed to be opposed root-and-branch, and that only after a Republican was president should people advocate for sensible policies.
I don't want to believe that applies here. But I do ask for an explanation. Why was failing to use the revenue from any carbon fee to reduce marginal tax rates a deal breaker in 2009, and part of the proposed plan now?
Greg Mankiw (and Ted Halstead and Martin Feldstein) (2017): A Conservative Case for Climate Action: "CRAZY as it may sound, this is the perfect time to enact a sensible policy to address the dangerous threat of climate change...
...Before you call us nuts, hear us out.... President Obama... did not sign any meaningful domestic legislation to address the problem, largely because he and Congress did not see eye to eye.... Our plan is built on four pillars. First, the federal government would impose a gradually increasing tax on carbon dioxide emissions. It might begin at $40 per ton and increase steadily. This tax would send a powerful signal to businesses and consumers to reduce their carbon footprints. Second, the proceeds would be returned to the American people on an equal basis via quarterly dividend checks...
Greg Mankiw (2009): A Missed Opportunity on Climate Change: "A cap-and-trade system is like a carbon tax...
...The price of carbon allowances will eventually be passed on to consumers in the form of higher prices for carbon-intensive products. But if most of those allowances are handed out rather than auctioned, the government won’t have the resources to cut other taxes and offset that price increase. The result is an increase in the effective tax rates facing most Americans, leading to lower real take-home wages, reduced work incentives and depressed economic activity.... To those who view climate change as an impending catastrophe and the distorting effects of the tax system as a mere annoyance, an imperfect bill is better than none at all.... President Obama knows what a good climate bill would look like. But despite his immense popularity and personal charisma, he appears unable to persuade Congress to go along.... I hope the president refuses to sign a bill that fails to auction most of the allowances...
