Should a carbon tax be imposed?
Overview
Economists' thoughts on imposing a carbon tax.
Economists' thoughts on Carbon Tax
American Economists suggest that Global Climate change is a serious problem. A document published by the Wall Street Journal shows that 3640 United States Economists, 4 Former Chairs of the Federal Reserve, 28 Nobel Laureate Economists, and 15 Former Chairs of the Council of Economic Advisors signed an Economist’s statement on carbon dividends to curve global climate change.
The first point proposes a carbon tax, which economists say is the most cost-effective lever to reduce carbon emissions at the necessary speed to limit the effects of global warming. Economists suggest imposing a carbon tax that will create effects towards a low-carbon future. Point two suggests a carbon tax increase each year unite economic emission reduction goals are met. A positive to this effect is that this might lead to technological innovations and infrastructure development in American society. Limiting carbon emissions by imposing a tax will promote economic growth by steering companies to invest in and produce over a long-term period, clean energy alternatives. In attempts to stop carbon seepage, economists suggest a border carbon adjustment system. A system that would give an advantage to firms in the United States that are more energy efficient than their global competitors, while inspiring other nations to adopt similar carbon pricing. The last point suggests returning the revenue to the people to maximize the fairness and political viability of the rising carbon tax.
It is cheap and mostly free to emit greenhouse gases. There are many cars on the road, and though the government might impose a gas tax, some citizens may choose to take public transportation, but most citizens will pay the tax and continue to drive because this is a privilege, and depending on citizen location, might save time. Though gas tax is imposed, individuals may continue to act in a rational self-interested way, that in the long run, produces a less-than-optimal outcome such as carbon emissions. This is why economists suggest the imposition of a carbon tax by the United States government so that citizens that are operating a motor vehicle would be taxed for carbon emissions produced by their cars. Limiting the use of carbon emission equipment can potentially lead to market failure, which is an inefficient distribution of goods and services in the free market since the population that is using carbon emission items will be the ones affected by the carbon tax. This could occur because, in a free market, the prices of goods and services are determined by the forces of supply and demand; any change in one of these forces will result in a price change and a corresponding supply change. These changes lead to price equilibrium.
One alternative is to impose a carbon tax on companies that are producing carbon emission equipment as part of their supply chain. The consumers that are purchasing the items should also have to pay a carbon tax at purchase, and annually during operation, as economists suggested.