Friday, December 28, 2012

Pigovian taxes

***It's back!***

After a long hiatus, I'm back up on the blog, mostly because my Natural Resource Economics class will start in a few weeks.

That, and this NYT article about carbon taxes caught my eye. The economics behind carbon taxes seems so plain: even libertarians should support so-called "Pigovian" taxes, it seems to me, and to the author of the article:

“I think most economists — on the right and the left — think a carbon tax is a good idea,” said Aparna Mathur, a resident scholar at the American Enterprise Institute, a conservative research group that held a daylong seminar on carbon taxes in November. Some economists estimate that a carbon tax could raise $400 billion annually in the United States, she said.

Such taxes accomplish two ends: they cut pollution and raise money. I would think that almost all economic thinkers would support putting the right price (or at least a better price than the current $0) on pollution.

Progressives might be worried about the fact that this would be a regressive tax, i.e. one having a larger impact on the poor. This is definitely an issue, but it can (and should) be addressed separately, such as providing income tax assistance to the poor.

If there's another argument against these taxes, I'd love to hear it!