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November 16, 2012

Murphy: Conservatives should rethink support for a carbon 'tax swap' deal

November 16, 2012
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IER Senior Economist Robert Murphy published an op-ed today for FOX News about the economic damages of a carbon “tax swap” deal. In a recent study, Murphy demonstrates that current pro-carbon tax discussions offer a ‘cure worse than the disease.’

“Many analysts, including some political conservatives, have endorsed a carbon “tax swap” deal in which the revenues from the new tax would be used to offset existing income or payroll taxes. However, in a new study I show that the economics literature suggests a carbon tax is likely far more damaging to the economy than conventional taxes.

What’s worse, many proposals earmark carbon tax receipts for deficit reduction, meaning it would constitute a net tax increase on Americans.

Finally, standard models show that if the U.S. imposes a stiff new carbon tax without cooperation from other major governments—notably India and China—then the economic costs to the U.S. will be greatly amplified while potential environmental gains will be squandered.”

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To read Robert Murphy’s study, click here

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