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How Regressive Do We Want To Be About Climate Change? Less? So, Taxes…

All the economists – you know, the experts on matters economic – who study what to do about climate change keep insisting that imposing a cost of carbon emissions through a tax or permit scheme is the efficient manner of dealing witih climate change. To which the usual answer is, yes, but that’s regressive. So, instead, let’s have lots of planning and schemes and regulation instead. Well, yes, but.

As it turns out, taxes are so much more efficient that the burden on the poor falls, even if in isolation the taxes are more regressive. This is, obviously enough, the mirror of the argument that a richer country might be more unequal but the poor are still – or can be at least, better off.

From VoxEU:

A carbon tax would be less regressive than energy efficiency standards

Arik Levinson 05 July 2018

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Phoenix84
Phoenix84
2 years ago

But this uses regressive to describe taxes in a wholly insane way. Whether something is regressive or progressive does not depend on what percentage of somebody’s income is spent on the item being taxed. By that measure, VAT is both regressive and progressive, depending on whether you are poor, middling or rich, and how much you save. The poor spend a lower percentage of their income on VAtable goods and services than the middle classes, who also spend more than the rich, because the rich save more. So is VAT progressive or regressive? And it entirely misses the point if… Read more »

Spike
2 years ago

Tim once again assumes we are not dealing with fraudsters, when the evidence is overwhelmingly contrary. To-wit, once they have gotten him to agree that taxation is the answer, provided he can design the tax, the goal instantly shifts, from mitigating “climate change” to doing right by this-or-that Able-Minded Victim Class. We need a tax on the sources of pollution, but one that will not hit the numerous citizens with “POOR” stamped on their foreheads. In the unlikely case that industry and liberty are warming the planet and that the planet is incapable of radiating the extra heat into space,… Read more »

Bongo
Bongo
2 years ago

If we want to explore silly, we can argue that any number of taxes and subsidies are progressive. The utility of owning that second car is a lot less than twice that of owning the first one, and the hooker in Pretty Woman enjoyed her first ever opera trip way more than the people having their 10th night out of the year. The argument against Pigou taxes is still made though on the grounds of progressivity of the tax system as if this is a key objection, so it needs taking down with whatever ammo you have. Good article by… Read more »

Southerner
2 years ago

The people who favour taxing ourselves over the hypothetical fictional costs of carbon-fueled industry are the same people who lose their minds over taxing ourselves over tariffs on imports.

Bongo
Bongo
2 years ago

If we want to explore silly, we can argue that any number of taxes and subsidies are progressive. The utility of owning that second car is a lot less than twice that of owning the first one, and the hooker in Pretty Woman enjoyed her first ever opera trip way more than the people having their 10th night out of the year. The argument against Pigou taxes is still made though on the grounds of progressivity of the tax system as if this is a key objection, so it needs taking down with whatever ammo you have. Good article by… Read more »

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