ESSEX Emissions, Tax Parasites and Poverty

June 25, 2018

By David Flemming

The ESSEX Plan is the latest in a long line of carbon tax proposals, this one with the goal of forcing Vermonters to use and buy more electricity instead of fossil fuels by taxing gasoline, diesel, propane, natural gas, etc. and using the revenue to subsidize electric rates. Supporters say this will help stave off climate change and, because of low income rebate payments baked into the plan, will be beneficial rather than harmful to the poor.

In reality, the ESSEX Carbon Tax, nor any carbon tax, will improve the lot of Vermont’s poor. Whereas two years ago, environmentalists encouraged Vermont legislators to adopt a carbon tax that included an $.88 tax per gallon of gas, they are now softening their demands to the tune of a $.40 tax. A carbon tax that is ‘slightly less cruel’ to poor Vermonters who drive the oldest cars, which consume the most gas on their long commutes, is hardly reason to support a ‘new and improved’ carbon tax. The ESSEX proposal is not substantively different than the previous proposal, in that those with the lowest incomes will pay the highest taxes.

Since the introduction of ESSEX, environmentalists have tried to tell Vermonters that ‘we did better than our last carbon tax’ by adding low-income rebates for poor Vermont families. Sounds enticing. However, these rebates can only be sizable if, as Johanna Taylor remarked, ESSEX is indeed, “pretty easy to administer, thereby not having too significant of a cost.”

The vast majority of government programs were not created in an attempt to stifle opportunity and hope. And yet, so many programs end up that way because flawed humans with diverging agendas administer them inefficiently. Taylor’s claim should not be judged on her sincere belief that ESSEX is conceptually brilliant, it should be judged on Vermont’s experience with government programs, which to put it nicely, have been “generally in excess of predicted costs.” If ESSEX follows this pattern, newly-hired bureaucrats will receive a good chunk of the rebate money intended for Vermont’s poor.

Efficient government programs are few and far between. When we realize that ESSEX will burrow into every crevice of Vermont’s economy, it is easy to predict that Vermonters may have to endure a festering mass of tax parasites that grow fatter with every passing year, sparing only those who can afford electric cars and solar panels, with little rebate respite. Indeed, the ESSEX Plan proposes to take 8 times as much money from taxpayers’ wallets in 2026 as in 2019.

Additionally, while most Vermonters don’t read the academic literature on poverty and climate change for fun, some of the more global studies reach some troubling conclusions. A University of Maryland 2016 study found that lifting people out of poverty will accelerate climate change as more people in third-world countries pull themselves into the middle class and are able to afford modern, life-enhancing conveniences powered by fossil fuels. Progressives that decry rising income inequality have conveniently neglected to mention a Harvard professor’s findings that actual poverty levels around the world are the lowest they’ve ever been. They will have to choose: do we continue allowing fossil-fueled innovations to lift people out of poverty, or do we attempt to slow climate change, sacrificing economic growth?

Attempt is the word. The ESSEX Plan will have roughly zero effect on climate change. Vermont’s percent of carbon emissions for the US sits at 0.1% (in 2015 according to the Energy Information Administration or EIA). Even if we dropped our carbon emissions to 0, there would be no meaningful reduction on US carbon emissions. Even if we believed the argument that policy in the Vermont can dramatically influence federal climate change policy, the US only produces 15% of global CO2 emissions from fuel combustion, as of 2015, according to the Union of Concerned Scientists.

Still, many Vermonters might say its “better than doing nothing.” Not necessarily. When British Columbia (B.C.) adopted a carbon tax in 2008, hopes were high. The tax was supposed to reduce Canadians’ reliance on fossil fuels. Unfortunately, B.C. now produces more CO2 than it did 2008. Canada, like Vermont, has invested massively in renewable energy to incentivize the phasing out of fossil fuels. Despite these investments, the bang-for-your-buck is generally, still greater for fossil fuels than for renewables. Most Vermonters still rely on fossil fuels to heat their homes and get from point A to B.

Until we admit that climate change should take second fiddle to reducing poverty in Montpelier, the poverty contagion will endure. Instead of worrying about reducing Vermont’s miniscule CO2 outputs, we should be debating the merits of private action and legislation for reducing poverty. When push comes to shove, I would rather not tax the heating fuel that a Vermont family is using to scrape by in the winter, just so that we can pat each other on the back for ‘doing something’ about climate change.

-David Flemming is a policy analyst at the Ethan Allen Institute

{ 2 comments… read them below or add one }

John Mahaffy June 28, 2018 at 6:52 pm

So, what happened to “Make the rich pay their fair share?” Perhaps our legislagors have realized that they are, in fact, the rich, and they ardently desire to be richer . . . rather than like the little people, who have all that Welfare and Government Subsistence to fall back on. In the long run, seeing things in perspective, the little people don’t matter so much as Doing the Right Thing for the World. Which is, you must admit, overcrowded anyway. Especially with all those little people. Oh! Did I say that? Well, let’s put our cards on the table: taxation is good for the economy. Without it, who would pay our salaries? And without us, how could we hope to have a Better World? Oh, not here, perhaps, but by our Example — if We All Do Our Part. . . .

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John Mahaffy June 28, 2018 at 6:56 pm

So, what happened to “Make the rich pay their fair share?” Perhaps our legislators have realized that they are, in fact, the rich, and they ardently desire to be richer . . . rather than like the little people, who have all that Welfare and Government Subsistence to fall back on. In the long run, seeing things in perspective, the little people don’t matter so much as Doing the Right Thing for the World. Which is, you must admit, overcrowded anyway. Especially with all those little people. Oh! Did I say that? Well, let’s put our cards on the table: taxation is good for the economy. Without it, who would pay our salaries? And without us, how could we hope to have a Better World? Oh, not here, perhaps, but by our Example — if We All Do Our Part. . . .

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