It’s Not a Carbon Tax

March 24, 2017
By Ted Halstead

Reports about the debate inside the White House over a carbon tax — apparently inspired by the meeting that James A. Baker III, Martin Feldstein, Gregory Mankiw and I held with Gary Cohn last month — get the terms wrong. Our plan, “The Conservative Case for Carbon Dividends,” isn’t a stand-alone carbon tax, but rather a revenue-neutral, carbon dividends program.

To describe our plan as a carbon tax is akin to describing Social Security as a payroll tax. Focusing exclusively on the funding mechanism ignores that which makes both Social Security and our proposal popular and populist. As James Baker emphasized at our press conference after our White House meeting: “This is a proposal for carbon dividends to the American people. And that’s going to be the beauty of it in terms of building public support.”


Why Republicans should embrace it: Sooner or later, the GOP will face a climate replay of the healthcare debacle now engulfing it. The only successful path to repealing a major program is by replacing it with something better. For now, the Trump administration is pursuing a repeal-only climate strategy. We are offering the GOP a replacement program that is an insurance policy for our climate, that would be considerably more effective than the Obama-era climate regulations it would replace and is an economic support program for America’s struggling working class. Embracing carbon dividends could be a strategic bonanza for the GOP.