1. Poorer people tend to drive older vehicles, so if you solely encourage higher fuel economies by taxing carbon emissions, then the tax is (at least short-term) regressive.
2. You can work around #1 by applying incentives for manufacturers to make more efficient cars should lead any carbon tax
3. If you just reward companies based on fleet-average fuel economy without regard to vehicle size, then it would be rather bad for US car companies (who employ unionized workers) that historically make larger cars than Asian and European companies.
4. So the first thing done was to have a separate standard for passenger vehicles and light-trucks, but this resulted in minivans and SUVs being made in such a way as to get the light-truck rating
5. We then ended up with the size-based calculation we have today, but the formula is (IMO) overly punitive on small vehicles. Given that the formula was forward looking, it was almost certain to be wrong in one direction or the other, but it hasn't been updated.
Every single one of your ideas has problems that are solved by a carbon tax. Taxes are simple, they accomplish what you want, and they don't have loopholes. A carbon tax will _never_ have the unintended consequence of making emissions worse. Many of our current regulations, including the one I was responding to do exactly that because they actually cause people to buy larger trucks than they otherwise would with worse fuel efficiency.
A carbon tax might not on it's own be enough to solve the problem (especially if you set it to low), but no matter what level you set it, it will help. Thanks to unintended consequences, many of our current regulations are actively counter productive, while _also_ having negative economic and other costs.
Shifting cost to the emitters is a better way to put it. If a factory can make 10m in upgrades over time to reduce their carbon tax burden by 15m over time, they are definitely going to do it. So I disagree: I say it does change behavior and it does reduce actual carbon.
> There's a lot more low-income emitters than high income ones
Whether that's true or not it does not mean a carbon tax would not 'reduce actual carbon'.
However, the part where the resulting revenue is pooled and payed out in an equal amount back per capita is progressive, since that payment is a greater fraction of a low income. Desirably, it also means that low-income people emitting less than the average would make money overall: consider a household consisting of a single mom and two kids that take public transit to work/school.
If you set the carbon tax at about $1/gallon of gasoline, the corresponding carbon rebate would be about $1000 per family per year.
That wouldn't affect rich people much; neither the $1/gallon nor the $1000 extra income is significant. But many rich people get rich by being penny-wise, so many would change behaviour, by buying an EV or similar.
But for poor people both $1/gallon and $1000 per year is significant. If gas was $1/gallon more expensive, poor people definitely would drive less.
I'm poor. I could get just the $X back as my carbon tax dividend and continue with my current lifestyle. Or I could make choices that emit less carbon, which will cost less since they don't have a carbon tax cost to them, and save an additional $Y on top of the $X I'm already getting.
What do I do?
Let's say that instead of taxing carbon, we pay people a bonus for emitting a below-average amount of carbon (proportional to the amount that they are below average by). If the amount is in a certain range, it will be too small an amount for wealthy people to care about, but large enough for poorer people to do things within their means (e.g. carpooling) to try to get it.
The results would hit certain geographic areas much worse than others, and (if priced enough to change behavior) would also probably depress car sales, which are two reasons why the federal fuel tax has been flat for over 30 years.
I believe this would be more fair to children who are the ones who will be most impacted by climate change in the end.
I believe there are even some governments that use this approach, but many of them don't make it feel as significant as it should. You should get a big fat cheque in the mail every month as if you won the lottery.
"Taxes are simple... and they don't have loopholes" is not at all how taxes work in the US. Perhaps your imagined perfect carbon tax is simple, but a simple tax with no loopholes is not likely to happen. Everyone wants a break or exception, and many of the interested parties are powerful.
You could say the same thing about zoning. Higher density is better for affordability, but faces opposition from landowning existing residents. Does that make it wrong, or not worth pursuing? No, and that particular movement seems to be getting traction despite the political opposition.
I read "trivially fixable" as "there is an elegant solution to this," not that "it is easy to get it politically passed."
In an ideal world, I'd like the tax to be made more progressive, but I'll take anything!
I'd like to see a carbon tax coupled with massive investments to make public transit legitimately good. There are too many places where there is no viable alternative to driving, a carbon tax will unnecessarily punish those people without giving them a reasonable alternative.
Government ‘carrots’ are almost universally a terrible idea because they codify specific solutions. Instead you can get the same effect more efficiently with a carbon tax large enough for people to notice.
Unfortunately, poor people don't have the cash on hand to hold them over until they get their Carbon Stipend on April 15th.
It's going to hurt poor people to charge them more at the counter, even if you give them more later. The stipend is just going to end up paying for less than the interest the tax created on a credit card.
Why would you think so? People driving older cars, not being able to afford to fly - will certainly spend more money on fuel for their car.
Maybe they drive a more efficient car, but they own much larger houses which are heated or cooled consistently, they travel a lot more, and they buy things with embodied carbon emissions.
I'll boil it down to:
If you want less of something, tax it.
I don’t think that level is sufficient to cover the externalities.
You give it back to poor as a income-phased out refundable tax credit. Crucially, base it not on how much they drive or consume, but on their income.
Name it something like the "Worker's Energy Credit". In the worst case, it cancels out the carbon tax spent by them commensurate with their lower income.
In the best case poor people who don't drive much actually come out ahead, and it's just a very progressive sales tax.
The rich might hate it, and call it "redistribution", which is fine because that's exactly what it is, and what taxes have always been, but this one would redistribute downwards instead of upwards, and incentivize lower carbon emissions by those who can afford it.
They do buy smaller cars. But they still spend a much greater percent of their income on gas. Worse, most of the auto industry has upsized their entire vehicle fleet. It's not as easy to find small used cars as it once was. They also are less likely to have jobs they can remote work, and can't afford to live close enough to the workplace to use transit.
Also many poor people need a larger car for their work. I'm not talking about a vanity pickup, but something more like a small pickup or a work van. Others may have many children to drive (maybe their own and others if they live in joint family situations).
Their solution is to buy a 3rd or 4th hand large vehicle.
Larry Page would be pumped. His annual salary is $1.
I feel pretty strongly that adding exceptions and loopholes to taxes only benefit wealthy people, which is the opposite of the intent.
I would be interested in reading a study where all the tax laws in the country were burned down and rebuilt, with no loopholes or exceptions. Also, eliminate borrowing against a stock portfolio. That is downright evil.
It depends what the exception is.
If the exceptions are "we treat a form of income received disproportionately by the rich a 'not income' and tax it at a lower rate, and on top of that we add an extra tax on top of income tax on labor income, and cap the larger part of that extra tax, too, to avoid burdening high earners", that helps the rich, sure. But there are plenty of exceptions possible that don't do that.
The tax would be on consumption, the credit would be based on income, so Larry still pays when he buys gas (if not for his cars, then for his planes).
> I would be interested in reading a study where all the tax laws in the country were burned down and rebuilt
That would burn down the country. Tax policy and the economy are a ship that has to be gradually turned in the optimal direction, just like how for the last 40 years tax policy has been gradually redistributing growth/wealth upwards. Sudden changes (like we are seeing now with indiscriminate tariff policy) are what results in the most harm to the poor.
> Also, eliminate borrowing against a stock portfolio. That is downright evil.
Agreed, or just heavily tax borrowing against a portfolio above, say, $2M/year. That way you don't penalize working people borrowing against 401ks or taking home equity loans for home improvements.
Salary might be $1 but what is his effective income when he files his taxes? That is what he is taxed on, which includes things like dividends and selling of stocks.
It would be a good deal for the country to let the billionaire use their skills to grow wealth without interrupting it and tax them all at death.
The idea that policy makers care about this in any meaningful sense is absurd given the EV mandates, as EV's radically change the lifecycle costs of cars in a way that is absolutely destructive to people who aren't wealthy.
EV's lower the 'fueling' cost but shift part of it into large cashflow crushing battery replacement costs.
Automobiles have been a significant engine in elevating less wealthy americans because you can buy a old junky car for very little and keep it limping along with use-proportional fuel costs and minor maintenance. Even if it's an inefficient car, you use it to go to work, so you're making money to pay for the fuel. Less work, less work fuel required.
EV's significantly break the model and will push many more less wealthy people onto predatory financing which they'll never escape. Yet policy makers refuse to even discuss the life-cycle cashflow difference of EVs, and continue to more forward with policies to eventually mandate their use.
> it was almost certain to be wrong in one direction or the other, but it hasn't been updated.
It's been broken all along. We've had decades to fix it.
https://en.m.wikipedia.org/wiki/Fuel_taxes_in_the_United_Sta...
Not correct. Fuel for private aviation is taxed, including jet fuel and avgas. However, there are very few "private" jets, most are operated by some company, and therefore not private. Jet-A1 for a truely privately operated C172 with a diesel engine is taxed.
The emissions just to shuttle rich people from one side of the country to the next (For some, multiple times per day) is insane. You should need to be a billionaire just to afford flying private jets and it should still eat a significant portion of your income if that's what you choose to do.
And for what? Like, we live in the modern era, why does anyone need to travel from NY to Florida to Texas to California in a day?
These guy will never ride a subway or take a train anywhere.
TIL that US car companies won't make smaller cars in the face of different regulations, even though they made larger cars in response to current regulations.
The only way to avoid perversions is to tax the problem directly. The market will adjust to all proxies in unintended and harmful ways.
The only way to avoid perversions is to incentivize the things you want.
Taxing cigarettes led to vaping. Maybe less bad but still a nuisance.