Wednesday, October 3, 2007

Rep. Dingell introduces carbon tax bill... And I respond

On September 27, Representative John Dingell (D-MI), chair of the House Energy and Commerce Committee, introduced a bill that would create a "carbon tax." Specifically, it would add a fee of $50 per ton of carbon emissions from fossil fuels -- coal (including lignite and peat), petroleum and petroleum products, and natural gas. In addition to this fee, the bill would add 50 cents to the cost of every gallon of gasoline and other liquid petroleum-based fuels. However, diesel would be exempt from this 50 cent surcharge, because "the fuel economy benefits of diesel surpass even its emissions benefits; it provides about a thirty percent increase in fuel economy and a twenty percent emissions reduction." Note that petroleum-free biofuels would also be exempt from this.

The revenue raised by the gas tax would go to the highway trust fund, with 40% of that going towards mass transit. The Earned Income Tax Credit would be expanded to help poor families cope with increased prices. And finally, the revenue from the carbon fee would go towards several government programs:

  • Medicare and Social Security
  • Universal Healthcare (upon passage)
  • State Children’s Health Insurance Program
  • Conservation
  • Renewable Energy Research and Development
  • Low Income Home Energy Assistance Program
First, I should mention that Representative Dingell's proposal for a carbon tax is IN ADDITION to a cap-and-trade system for carbon regulation. After some thought, I think that this is a good idea. While the cap-and-trade system would encourage research, development, and deployment, a carbon tax would have immediate effects in terms of purchaser choices. The two systems working concurrently is a good idea.

I am delighted to read about the mortgage interest deduction phase-out for large homes. This is a great idea, because it gets at one of the overarching problems that contributes to our increasing carbon emissions -- the growth of exurbia and its concomitant increase in commute times etc. This original proposal could be an effective way to deal with this serious problem.

The increase in funds for low-income families to help them deal with these price increases is also a great idea, although care must be taken to make sure that this is done wisely.

However, I would like to see the revenue from the tax go more specifically to Energy Conservation and Renewable Energy Research & Development, rather than being split between all the programs listed there.

Rep. Dingell's proposal (summary)

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