TAX NEWS - June 2010

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Carbon Tax Would Raise Much Needed Revenues

A carbon tax, or a fully bid cap and trade system would raise a lot of revenue, and that revenue would come from the private sector. The argument is made that in a very slow economy like we have now, this is not the time to raise taxes. That is a fair enough criticism.

The answer would be to offset the tax revenue raised by a price on carbon with tax cuts elsewhere. I think a very good candidate would be the employer side of the payroll tax. That would make it much more attractive for employers to hire people and get people back to work. Again, remember if you tax something you get less of it. Does it make any sense to be taxing employment and not be taxing carbon emissions? No.

Another thing that could be done would be a doubling or a tripling of the standard exemption and lowering everyone's income taxes, and for the vast majority making their taxes much simpler to figure out. There are lots of good ways we could return the money to the economy through lower taxes.

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