Fighting Climate Change With an Income Tax

"Rep. Alexandria Ocasio-Cortez (D-N.Y.) is floating an income tax rate as high as 60 to 70 percent on the highest-earning Americans to combat carbon emissions," reports Matthew Choi for POLITICO on Jan. 4.

Speaking with Anderson Cooper in a “60 Minutes” interview scheduled to air Sunday, Ocasio-Cortez said a dramatic increase in taxes could support her “Green New Deal” goal of eliminating the use of fossil fuels within 12 years — a goal she acknowledges is ambitious.

She does clarify in the interview and the Mediaite transcript that "not all income for a high earner is taxed at such a high rate. Rather, rates increase on each additional level of income, with dramatic increases on especially high earnings, such as $10 million," explains Choi. In other words, she wants to add more progressivity to the income tax to pay for her plan to address climate change, which she calls the Green New Deal.

What is the Green New Deal?

As of Jan. 4, Ocasio-Cortez does not list "Green New Deal," nor, for that matter, even "climate" or "environment" on her Congressional webpage, though she does list "energy," although it has yet to be filled. However, her campaign website does have an extensive description for Mobilizing Against Climate Change listed under "issues." While it doesn't mention specific measures, it does provide Ocasio-Cortez's perspective on addressing climate change:

It’s time to shift course and implement a Green New Deal – a transformation that implements structural changes to our political and financial systems in order to alter the trajectory of our environment...

Right now, the economy is controlled by big corporations whose profits are dependent on the continuation of climate change...Rather than continue a dependency on this system that posits climate change as inherent to economic life, the Green New Deal believes that radically addressing climate change is a potential path towards a more equitable economy with increased employment and widespread financial security for all...

Why not a carbon tax?

We'll have to wait till Sunday to see if Anderson Cooper asked Ocasio-Cortez if she had considered taxing carbon emissions to finance climate action, as most economists advise, including William D. Nordhaus of Yale University who received a Nobel Prize in economics last October for his assessment of the economic impact of climate change, including his advocacy for governments to tax carbon emissions.

Meanwhile, we can read a New York Times New Year's Eve column on funding the Green New Deal by another Nobel laureate in economics, Paul Krugman:

So what does the Green New Deal mean? It’s not entirely clear...But the main thrust, as I understand it, is that we should make a big move to tackle climate change, and that this move should accentuate the positive, not the negative. In particular, it should emphasize investments and subsidies, not carbon taxes.

He lays out the pluses and minuses of carbon taxes, although his main focus is more political, what Democrats "figuring out what, exactly, they will try to do if they gain policymaking power in 2021."

A POLITICO news article (via Planetizen) last month suggested that some in the environmental community were turning away from carbon taxes due to the French Yellow Vests movement, triggered by a fuel tax hike stemming from a climate plan, and the defeat of a Washington state carbon fee initiative last November.

A New York Times op-ed published Dec. 27 makes the same point. Calling it "politically toxic," former New York Times environmental reporter, Justin Gillis, suggests other ways to cut emissions, such as renewable energy initiatives, but he doesn't address the funding issue.

We've been here before – with traffic congestion and public transit.

Last year, New York City Mayor Bill de Blasio wanted to repair his city's ailing subway by adopting "a so-called millionaires tax, while Gov. Andrew Cuomo initially favored a cordon area congestion toll, similar to the London Congestion Charge. Neither advanced, though a surcharge on for-hire vehicle trips in Manhattan below 96th street was approved by the state legislature in the governor's budget last April.

Heretofore, the debate on using carbon pricing to fight climate change has been between those who favored them and those who opposed them. Now that Rep. Ocasio-Cortez has revealed her funding measure preference, perhaps the debate will change to a comparison of carbon and income taxes.

History of the term, "Green New Deal"

Sierra news editor, Heather Smith asks (and answers), "Is this deal really so new?" in a feature article on Nov. 28, 2018.

Sort of. The term “Green New Deal” has been making the rounds for at least a decade, and many policy wonks in the US, the UK, and other countries around the world [pdf] have developed their own proposals for what that might look like during that time. 

The Sierra Club’s Living Economy program has a detailed overview of various Green New Deal ideas here.

Related:

• Learning the Wrong Lessons From France's Yellow Vest Movement, Jan. 3, 2019
  The widespread Yellow Vests protests are wrongly being interpreted as a movement against carbon taxes and climate action, rather than a revolt against social inequities.
• Democrats to Address Climate Change in 116th Congress, Jan. 2, 2019
  Speaker-designate Nancy Pelosi has selected Rep. Nancy Castor (D-Fla.) to chair the new Select Committee on the Climate Crisis. Two bills that could advance in the House: the Green New Deal and a carbon tax-and-dividend bill, H.R. 7173.
• Are Environmentalists Turning Away From Carbon Taxes? December 11, 2018