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CBO: Carbon tax would hurt economy, do little for global warming

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After months of debate over the merits of a carbon tax, the Congressional Budget Office has finally weighed in and found that a tax on carbon dioxide emissions would have a negative impact on the U.S. economy and do little to curb global warming.

“Without accounting for how the revenues from a carbon tax would be used, such a tax would have a negative effect on the economy,” according to the CBO. “The higher prices it caused would diminish the purchasing power of people’s earnings… Investment would also decline, further reducing the economy’s total output.”

“Acting on its own, the United States could have only a modest effect on the amount of warming,” the report continued. “In particular, efforts to limit global warming are likely to require significant reductions in emissions by rapidly growing economies, such as those of China and India.”

A tax on carbon dioxide emissions has been promoted by Democrats and environmentalists as a way to reduce the deficit while addressing climate change. It has also been sold to conservatives as a way to eliminate some environmental regulations and energy subsidies.

“Right now we tax income, labor and industry, but we don’t tax the negative externality associated with the burning of fossil fuels,” said former South Carolina Rep. Bob Inglis, a Republican, who introduced a carbon tax while in office. “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.”

California Democratic Sen. Barbara Boxer and Vermont independent Sen. Bernie Sanders introduced a carbon tax bill that would slap a gradually rising tax on carbon emissions which would help fund green energy projects such as wind and solar.

“Carbon could cost us the planet,” Boxer said on the Senate floor. “The least we could do is put a little charge on it so people move to clean energy.”

However, most conservatives aren’t biting.They argue that a carbon tax would essentially be a tax on all goods and services.

“Look, there are no conservatives that are for this,” Grover Norquist, president of Americans for Tax Reform, previously told The Daily Caller News Foundation.

“It’s not just energy prices that would skyrocket from a carbon tax: the cost of nearly everything built in America would go up,” said Louisiana Republican Sen. David Vitter. “You always hear proponents talk about regulating or taxing carbon dioxide, but you never hear them address the consequences of how it would increase the cost of energy for those least able to afford it, or the detrimental effects on domestic manufacturing and jobs.”

The CBO’s study confirmed such concerns: “By raising the cost of using fossil fuels, a carbon tax would tend to increase the cost of producing goods and services — especially things, such as electricity or transportation, that involve relatively large amounts of CO2 emissions.”

However, Inglis said he’s not focusing so much on members of congress, but instead looking to younger conservatives who are more receptive of the idea.

“Well I’ve spent a lot of time on college campuses at College Republicans, Federalist Societies at law schools, energy clubs at business schools, and they all get it,” Inglis said.

Other critics worry a carbon tax could be part of a major tax reform effort.

“The danger is that it could be included in a big budget or tax reform deal,” said Myron Ebell, director of energy and global warming policy at the Competitive Enterprise Institute and director of Freedom Action. “Such deals are negotiated in secret. A carbon tax could be included as part of the package and never have an up-or-down floor vote.”

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