WASHINGTON, July 25, 2012 -The prospects of a carbon tax being introduced in Congress next year are surfacing, some analysts say, though there is considerable debate over how benefits from the levy would be applied.
Former Rep. Bob Inglis, a Republican who served 12 years in Congress representing South Carolina, is among a number of conservative leaders who are calling for taxes on the carbon content of power sources and transportation fuels. He recently created the Energy and Enterprise Institute to formally advocate on behalf of the carbon levy.
He joins several conservatives who are lauding the recent increase of a carbon tax in the Canadian province of British Columbia, which is using the tax on fossil fuel carbon to reduce taxes on individuals and businesses. Inglis would eliminate subsidies, tax breaks and other benefits for various energy sources, including renewable energy, while adding the cost of emissions from carbon-heavy fuels into their price.
“We tax income, labor and industry, but we don’t tax the negative externality associated with the burning of fossil fuels,” he said over the weekend. “If you attach the negative externalities, the hidden cost, to those fossil fuels, then the economics would be set right for the challenger fuels to succeed in a fair competition.”
George Shultz, Secretary of State in the Reagan administration, is among other nameplate conservatives who have indicated their support for implementation of a carbon levy on the U.S. tax code.
Still, the concept drives conflict among conservative elements. Economist Kevin Hassett, who, with the American Enterprise Institute has suggested a carbon tax is a viable alternative, recently took some flack from other conservative organizations for staging a seminar with more liberal think tanks to discuss a carbon tax as a more viable option in countering climate change than a cap-and-trade system. A free-market economist and regular contributor to National Review who worked as a policy consultant during the presidential campaigns of both George W. Bush and John McCain, Hassett was forced to issue a response to the criticism.
“In recent years, AEI has been accused of being both in the pocket of energy companies and organizing to advocate a carbon tax. Neither is true,” he said. “AEI has been, and will continue to be, an intellectually curious place, where products aren’t influenced by interested parties, and ideas from all are welcome in seeking solutions for difficult public policy problems.”
Paul Bledsoe, a former Senate Finance Committee aide who now serves as a senior adviser at the Bipartisan Policy Center, says the necessity of new revenue to compensate for lower individual and corporate tax rates – and reduce the deficit – is driving the attention toward remedies like the carbon tax.
But even those groups who support a carbon tax and differ on how to use the revenues it raises.
Taxpayers for Common Sense has long supported a carbon tax, says Autumn Hanna, but only as a way of reducing the deficit. She said revenue neutrality is “not something that makes sense,” she said. Spokesmen for both House Speaker John Boehner, R-Ohio, and Senate Minority Leader Mitch McConnell, R-Ky., have said neither supports a carbon tax.
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