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Manhattan Institute

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The Painful Realities of Carbon Tax-and-Dividend Schemes

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The Painful Realities of Carbon Tax-and-Dividend Schemes

Washington Examiner October 10, 2019
Energy & EnvironmentClimateRegulations

Late last month, Climate Leadership Council President Ted Halstead and Exelon CEO Christopher Crane touted their carbon tax-dividend scheme, under which they promise “the vast majority of Americans will be economic winners.” The plan sounds too good to be true — ever-higher carbon taxes providing ever-greater economic benefits — because it is. In reality, such a tax would cripple the economy and set off trade wars with the rest of the world that would dwarf our current dispute with China. And to top it off, the proposal would have no measurable impact on global climate.

The CLC proposal starts with a $40 per ton tax on carbon dioxide emissions, increasing at least 5% above the rate of inflation annually. At current CO2 emissions levels, that’s about $200 billion per year. If inflation averaged just 2% per year, by 2025 the tax would increase to $56/ton. For gasoline, that would mean a tax of $0.55/gallon.

Except the tax would increase inflation rates because energy is used to produce virtually all goods and services. For example, the OPEC oil embargoes in the 1970s were akey contributorto the high inflation rates of that decade. Hence, the carbon tax would increase far faster than advertised, increasing the economic harm.

Continue reading the entire piece here at the Washington Examiner

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Jonathan A. Lesser, PhD, is an adjunct fellow at the Manhattan Institute, president of Continental Economics consulting, and author of the new report, “Is There a Future for Nuclear Power in the United States?

Photo by Sjo/iStock

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