Tuesday, July 10, 2007

Truth in Carbon Taxes

The other day the New York Times reported that that Representative John Dingell planned to introduce a bill to raise gasoline taxes to combat global warming. Apparently Representative Dingell, who is from automobile producing Michigan, wants to illustrate that the public and specifically Democrats in Congress will not support an increase in gas taxes.

But Mr. Dingell, in an interview to be broadcast Sunday on C-Span, suggested that his goal was to show that Americans are not willing to face the real cost of reducing carbon dioxide emissions. His message appeared to be that Democratic leaders were setting unrealistic legislative goals.

“I sincerely doubt that the American people will be willing to pay what this is really going to cost them,” said Mr. Dingell, whose committee will be drafting a broad bill on climate change this fall.

Today the Wall Street Journal weighed in with an editorial praising Representative Dingell for his his honesty relative to others who would prefer to combat global warming through increased regulatory standards on fuel efficiency, but coming out as opposed to increased fuel taxes nevertheless.
Speaking for ourselves, we don't favor a carbon tax. In theory, such a tax might make sense if it were offset by lower taxes on income tax rates and capital investment--which would be a net plus for economic growth. However, there's not a chance in melting Greenland that the current Congress would offset any new carbon taxes; it would merely pocket the extra revenue to permanently increase the government's share of GDP.

Although I certainly do not trust anyone in Congress to immediately refund any additional gasoline tax revenue, I do support increased gas taxes, although I support them primarily on national security grounds. The Islamic Fundamentalists and the Iranian regime receive the majority of their funding from oil sales so reducing their revenues should be a key component to our strategy. While we cannot immediately cease all foreign oil purchases we can slow the rate of our oil consumption by imposing additional taxes and then use a portion of that money to oppose our enemies.

Of course we would also see some environmental benefits. Benefits that would be much more tangible than those obtained through increased fuel efficiency. Nonetheless, the reason to increase gas taxes is national security not the environment.

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