Carbon Tax Supporters Don’t Understand Math 

By Rob Roper

This week saw a flurry of Carbon Tax Bills – four of them – hit the legislature in anticipation of potential passage during either a special legislative session this fall or in 2018. The shotgun approach to Carbon Tax policy seems to be a “throw everything at the wall and hope something sticks” strategy. If we cut property taxes will you support a Carbon Tax? No? How ‘bout if we cut the income tax? Still no? Sales tax? Please? Pretty please? No.

But here’s a big reason Vermonters should be very worried about these or any other Carbon Tax proposals: Asked why now is the time to move forward with a Carbon Tax, lead sponsor Rep. Johanna Donovan (D-Burlington and mother of Attorney General T.J. Donovan) said, among other things, “Because we are aware now that we’re going to have a special session in the fall. These will be revenue bills, and if indeed some of the draconian cuts we hear may be coming our way, these are things we could use to raise revenue.” [Emphasis added] (WPTZ, 4/9/17)

RAISE REVENUE! A.k.a. “collect more money” or “increase taxes.”

Later Donovan said that the proposed Carbon Taxes would be revenue neutral, “a wash”, meaning that other taxes would be cut to offset entirely any tax increase on carbon. But you can’t close a revenue gap created by “draconian cuts” with a revenue neutral policy because, well, math! You can only backfill draconian cuts with draconian tax increases. So is that what we’re really talking about here or not?

Either Donovan is misleading Vermonters about the true intent behind these new Carbon Tax proposals and they are really designed to raise a bunch of cash for Montpelier to spend, or she doesn’t understand what it is she and her colleagues are proposing. Neither alternative is comforting.

The question Vermonters have to ask is if politicians faced with a choice of giving money back to taxpayers or spending it on their cherished programs will ever, in the end, opt for the former over the latter. Rep. Donovan’s Freudian slip here has given us some insight into the answer.

- Rob Roper is president of the Ethan Allen Institute.

{ 7 comments… read them below or add one }

Irma Nagle April 12, 2017 at 12:14 pm

NO CARBON TAX OF ANY KIND!!! WE VERMONTERS CAN HARDLY PAY THE TAXES AS IT IS

HOW ABOUT A BILL INTRODUCING AN ETHICS LAW FOR OUR LEGISLATORS? WHERE IS THAT BILL? ENRICHING YOURSELVES AT OUR COST IS DISGUSTING

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Fred Lowen April 12, 2017 at 4:37 pm

The argument over whether we need more government or less government is a meaningless red herring. What we all need is more good government and less bad government. Same is true for regulation and tax legislation.
We need better government, regulations and tax code. Government is not the problem. The problem is an inethical, inefficient, and exploitive government and (large) corporate partnership.
IMO, we need to continue to incentivize clean energy use, and dis-incentivize polluting fossil fuel energy use. The current tax code and business climate includes many hidden subsidies and preferential treatment for oil/gas/coal production and use, especially for transportation.
Whether it is carbon emissions, or direct pollution of ground, water, and air, the US Goverment enables the oil/gas/coal industries to produce and sell their dirty toxic products without accountability for the damage they do. Politicians bend over backward and forward to help these companies keep the price of oil, gas, and oil much cheaper than would be the case in a true free market; ie a market that is not distorted by the tsunami of corporate and billionaire money that buys government legislation, regulation, and politicians. Subsidies and government assistance for oil/gas/coal production dwarfs and has dwarfed any taxpayer subsidy for renewable energy production and use; all for the purpose of keeping oil/gas/coal prices artificially cheap to preserve the giant market share the oil/gas/coal industries enjoy.

Whether it is carbon tax, or gasoline tax, the oil/gas/coal industry owners and their supporting politicians have created the illusion that cheap oil/gas/coal is in everyone’s interest, when in fact in it only preserves the wealth and hegemony of the fossil fuels industries. They have let our infrastructure and environment go to hell in the interest of keeping the cost of those fuels as cheap as possible, although oil and gas powered vehicles are probably 95+% responsible for the wear and tear.

I would point out that the construction of the US Interstate highway system in the 1950s and 1960s, continuing today, paid entirely by we taxpayers, is the single most important factor that enabled Exxon-Mobil to become the world’s largest corporation for many years until recently. They “earned” (although “pirated” is more appropriate IMHO) $1,000,000,000 ($1 Billion) per week, until oil prices collapsed in these past 2-3 years. Yet the politicians that front for these producers refuse to consider a gasoline tax that could easily afford our infrastructure to be the envy of the world….we are after all by far the wealthiest country in the world.

We will get the best government we deserve, and the worst government we will tolerate.

In 2017, we tolerate an awful government, but it is because we don’t appreciate how effectively and completely the corporate and Billionaire interests have captured the US Government. We have a government-corporate partnership that exploits the population and the environment.

Profits are privatized while costs and expenses are socialized. Corporations and billionaires get obscenely rich while we taxpayers pay the costs. Meanwhile we are sheparded to the corporate cash registers.

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Rob April 12, 2017 at 5:03 pm

Fred, I agree with some of what you say, but are the Oil companies greedy bastards for conspiring to keep oil prices cheap, or for “pirating” high profits when prices are high? Seem to me they’re damned either way with you! If they were really as greedy and powerful as you make out here why wouldn’t they would use that power to keep prices high, not low. However, you are correct that profits tend to be privatized and losses socialized with these corporate/political alliances. Both should be privatized.

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Fred Lowen April 12, 2017 at 6:11 pm

Thanks Rob for your attention and reply

It is a longer story IMO, but greediness has generally come to dominate and trump (no pun intended) the noble idea of seeking profit by providing a product or service that truly benefits its customers….this has become true for all industry groups. It is a turn in motivations that has occurred within my lifetime….at least it has certainly become more extreme. It’s obvious in cases like Wells-Fargo, United Airlines, the pharmaceutical industry, etc, etc, etc. It is perhaps less obvious in cases like Microsoft, Facebook, communications utilities, for-profit education, automobile manufacturers, food processors, etc, etc, etc….but it is widespread, resulting in the opposite of “trickle-down”: it is flowing up.

While there are certainly greedy managers and owners, large corporations who are politically connected on the national level are systematically organized to maximize profits, preferably increasing annually while minimizing costs. The pressure to perform financially leads to an “anything goes’ attitude and operation. Lobbying activities and expenditures basically de-criminalize and enable activities that slants the playing field to where consumers money falls out of their pockets into the greedy hands within the corporations.

You generally don’t hear a real discussion as to why the cost of living is so high for US citizens, because it would highlight the ways the population and environment is exploited by the corporations and billionaire owners, aided by government activities. It is much more systemic, than caused by any individuals. Everyone is caught up in it, relatively few truly benefit….except for the usual suspects. But I digress…

To answer your question: even the mighty oil companies or government cannot control the price of oil and energy, although they can affect it at the margins: either exacerbating a trend up or down, or retarding it. The energy business is characterized by alternating booms and busts, and they manage it very well. They have done it for a long time.
What they fear the most is “demand destruction,” so when demand is strong and prices are high they break financial records, when demand and prices are low, they expand market share. It’s quite understandable.

My problem is that the oil/gas/coal industry actively works against the interests of people everywhere. They are incentivized to do so by manipulating the socioeconomic political climate, ie, unfairly, to limit choice and competition while incentivizing people to use their products exclusively; and further, to accept and pay for the environmental and health damage the production and use of their products cause.

It is an illusion that we have a capitalistic free market economy in the US today. It is certainly capitalistic, but the only thing free about it is what the uber-wealthy freely take.

We have plenty of problems, perhaps the biggest is a psychological problem: living with too many illusions, causing confusion, resulting in political grid-lock, freeing up the behind-the-scenes powers-that-be to enhance the status quo. The only change we can expect is much, much more of the same…..until the break-down comes, and of course it has already begun.

Again, thanks for looking

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David Usher April 15, 2017 at 3:16 pm

Flowing more Vermont tax dollars through the the hands of the Vermont legislature and bureaucrats wrapped in the gauze of climate change mitigation must be vehemently resisted whenever it pops up. You are correct, Rob, that this high sounding proposal is fraught with hidden agendas.

If the dubious goal of 90% of Vermont’s energy produced from renewables has any validity, the ‘carbon problem’ will be taken care of. A massive economy-destroying carbon tax is a fool’s errand.

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Willem Post April 16, 2017 at 12:33 am

David,
Democrat legislators want to get their hands on that car on tax money so the can set up more government programs for their favorite constituencies, which ties these people to these legislators forever.
It has absolutely nothing to do with global warming, because what Vermont does is just a fly on an elephant’ s ass.

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James Hall April 17, 2017 at 8:26 pm

The proposal to cut other taxes already being collected is nothing more than a pig in a poke; like Shumlins no new taxes, until the healthcare monster he backed came along.
The Democrats will give temporary reductions, but down the road they will bring anything reduced back to original or higher levels. This is the way they operate.
Vermonters, do not fall for it !!!! It will bankrupt us all if the C Tax even gets a trial run.

It is the worst of any bad news I have heard of in years.

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