Earth Equity News

Imagine: A Harmonized, Global CO2 Tax. By James Hanley, CarbonTaxCenter, March 11, 2009. "In their seminal report last February, Policy Options for Reduction of CO₂ Emissions, Peter Orszag (now Budget Director) and Terry Dinan of the Congressional Budget Office meticulously compared cap-and-trade with carbon tax options. They concluded that a carbon tax would reduce emissions five times more efficiently, primarily because of price volatility under a fixed cap. CBO had no difficulty 'imagining a harmonized global carbon tax.' Chapter 3 of the Orszag-Dinan report, 'International Consistency Considerations,' describes straightforward ways to harmonize carbon taxes. If nations choose different carbon tax rates, border tax adjustments permitted under World Trade Organization rules authorize higher-taxing nations to enact tariffs to equalize tax rates on imported products to the same levels applied to similar domestically-produced products... Rep. John Larson's new carbon tax bill employs precisely this strategy. In effect, the U.S. would collect and retain the revenue generated by equalizing carbon taxes on products imported from countries that haven't enacted their own or whose carbon tax rate is lower than ours. That will provide a powerful incentive for our trading partners to follow our lead... Yes, we can imagine, and yes, we must enact, a harmonized global carbon tax system... Rep. Larson has defied the naysayers; he has put the 't' word back on the table. Not a moment too soon."