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.”
To continue reading, click here
To read Robert Murphy’s study, click here