Let the Carbon-Dividends Debate Begin

National Review
February 28, 2017
By George P. Shultz and Ted Halstead


The cornerstone of our opponents’ argument is that our plan would be regressive and place “undue economic burdens on American families,” especially those who are among our “nation’s economically disadvantaged.” This feels a little like we’d unveiled a new sports car only to have a reviewer publish a critique of a horse-drawn buggy. Alone, a carbon tax (the buggy) might well be regressive, but that is hardly what we are proposing. Our four-part program centers around a carbon tax whose proceeds are returned equally to the American people in the form of monthly dividends.

Under our plan, which would begin with a carbon tax rate of $40 per ton, a family of four would receive approximately $2,000 in the first year. According to the Treasury Department and several independent studies, the bottom 70 percent of Americans would come out ahead if our plan were enacted, meaning that they would receive more in dividends than they would pay in increased energy costs. In other words, we could help alleviate climate change while benefiting 223 million Americans economically.

If our critics have reason to worry, it is because our program might be so popular with working-class Americans that it would lead them to support continued increases in the carbon tax to increase their dividends, in addition to promoting the clean-energy alternatives that the vast majority of voters, including Republicans, clearly favor.


A repeal-only climate policy would be shortsighted in other important ways, too. For one thing, it would deprive the GOP of a prime opportunity to exercise leadership and showcase the full power of the conservative canon. For another, it would betray a lack of confidence in the ability of free markets and limited government to solve a critical challenge of our era, which would then leave open the door to greater government intervention should Democrats retake power in the future.

Our critics are so blinded by their reflexive opposition to carbon taxes and their straw-man arguments against our plan that they fail to see the forest for the trees. What we are offering the GOP is a way to advance all of President Trump’s stated objectives at once: Our plan is pro-growth, pro-jobs, and pro-competiveness. It would deregulate the economy and rebalance trade, all while helping the working-class Americans who elected Trump. You’d be hard-pressed to find an alternative policy framework that ticks all of those boxes while significantly expanding the GOP’s base.