When Regressive is Progressive

As the editorial board wrote recently [posted here], taxing sources of carbon emissions is an effective way to reduce the use of these polluting fuels and to generate revenue that can be used in a variety of ways, including reducing other taxes and investing in transportation and research. British Columbia (B.C.) has imposed a modest carbon tax since 2008 and has cut emissions without hurting its economy.

Regressive? Yes....but....

Bajaj adds:

There is no question the fee will increase the cost of gasoline, diesel and other fuels and products made from oil. That’s the point. But with oil trading at around $32 a barrel, this is an ideal time to start imposing a carbon tax. It would be easier for individuals and businesses to adjust to such a tax now than it would have been less than two years ago, when oil was at more than $100 a barrel.

Bajaj could have written more about the B.C. carbon tax, which can be viewed as progressive as it is used to reduce income taxes, as a 2012 post indicates:

"British Columbia has lowered its corporate income tax rate to 10 percent from 12 percent, a rate that is among the lowest in the Group of 8 wealthy nations. Personal income taxes for people earning less than $119,000 per year are now the lowest in Canada, and there are targeted rebates for low-income and rural households."

The above-cited editorial notes that the B.C. carbon tax is the highest in North America, comparing it to carbon cap-and-trade programs elsewhere. It classifies the carbon tax as revenue-neutral for the aforementioned reasons.

British Columbia, which is home to 4.7 million people, has placed the highest price on emissions in North America, taxing a ton of carbon emitted at 30 Canadian dollars, or about $21. By comparison, emission permits in California and Quebec are trading at about $13 a ton. And permits sold for $7.50 a ton in a December auction in the Northeastern trading system known as the Regional Greenhouse Gas Initiative. That system covers emissions from power plants in nine states that include Connecticut, New York and Massachusetts.

But if it's a foregone conclusion that Republican opposition will ensure that the oil barrel fee goes nowhere, why introduce it? Bajaj takes a positive outlook here. No one expected marriage equality to become the law of the land, or health care reform to pass, he opines. And polls show that "a majority of Americans believe climate change has already begun."