Instead of a carbon tax, let's have a carbon dividend
Alan DeBoer rightly questions the equitability of House Bill 2020 and whether it would place an unfair burden on the poor and rural residents of Oregon (Your View, June 23). However, his “solutions” would lead to the same unfair outcomes that we find in the House bill. Though his program would “start smaller,” it would still allow the state to distribute the revenue from his carbon tax program just as we find in the cap-and-trade program of House Bill 2020, though he claims the way he would distribute the revenue is wiser and better for the state. Instead, I would give 100 percent of the tax revenue from such a program directly back to citizens as a monthly carbon dividend check to spend as they see fit.
No one who has looked carefully at the data can question the destructive consequences of global warming. It is an immediate problem that affects both local and worldwide communities. You cannot separate one from the other, which means we all have responsibilities in trying to reduce carbon emissions. The question is, what program to use in Oregon that is efficient and equitable, particularly given the income gaps between our urban and rural communities? Most economists agree that the best way to deal with global warming is by a tax on greenhouse-gas emissions where they enter into the atmosphere. A carbon tax is the most efficient way to capture the social cost to society caused by these gases. However, efficiency does not mean fairness as we saw in France when the government launched a diesel tax that would hurt the poor and rural citizens more than rich and urban residences. The same issue confronts Oregon. A carbon tax would have more of a negative impact on the lives of low income and rural populations in our state than wealthier urban areas that have more extensive access to public transportation and other amenities than those that live in less populated areas. A monthly carbon dividend check given to all citizens of an equal amount would help deal with this inequity.
How the program would work is that carbon still would be taxed to give incentives for businesses, communities and individuals to change their behavior or nudge them away from carbon-intensive goods to those that are not, but the revenue from the tax would go directly back to all residence in equal shares. Since a carbon tax is regressive, the poor and those living in rural areas feel the brunt of the tax more than the affluent and those living in urban areas. But a carbon dividend of equal share to each household reverses this burden because every dollar returned to the poor is worth more than to someone wealthy. Also since the well-off have bigger houses, more cars, and some even have planes, they will contribute more per capita to the carbon dividend, which will mean that almost three-quarters of those living in rural areas in Oregon will receive more money than what they put into the carbon dividend program — they will be financially better off!
For any carbon reduction program to succeed, it must deal with both efficiency and equity. Oregonians do not want a new government “grant program ... for citizens that are struggling to survive.” Moreover, they do not want to create a new program that simply generates new revenue for the state with no guarantees that it will be spent to deal solely with climate change, which is one of the problems with the cap-and-trade program in California. A carbon divide program is the way to go.
Richard P.F. Holt is professor of economics at Southern Oregon University.