TAXES, the elephant in the room. Governments, not just ours, are spending lavishly, slavishly (?) to offset the effects of COVID-19 and Putin. They are going to have to borrow vast sums to keep their promises. Someday they are also going to have to pay off those loans. During World War II the Government sold savings bonds to the citizens so government could pay off the war cost over time. This situation snuck up on us. After the big war people cashed in those bonds and boosted the economy by spending for all those things they did without during the war. It is not clear who we are borrowing from now, or how that is going to go back into the economy.
Taxes will have to go up. The question is what to tax. One step would be to undo the 2018 billionaire tax giveaway. Regressive taxes will not solve the problem because a dollar taken from a working family takes about a dollar and a half out of the economy. There is one tax that would be egalitarian. Carbon. Everyone consumes it, and in proportion to their willingness to pay for it. The 150-foot mega-yacht uses a lot more fuel that the working family’s little fishing skiff. It consumes more at idle than 100 skiffs at full speed. The private Gulfstream consumes more jet fuel than a seat in economy class or on the bus. The second vacation home in Aspen, you get the idea. Energy consumption is exponentially connected to lifestyle, taxing it in the form of a carbon tax is progressive without being selective or punitive. It’s just inherently fair. There may have been a great crime behind some great fortunes, but a lot of others represent smart hard work. Being rich is not itself a crime. Many billionaires got rich building something and making others richer too, like Steve Jobs and Henry Ford.
Granted a carbon tax across the board will cause some pain, but at least in proportion to ability to absorb it. Working people can be very creative in ways to avoid buying that which is overpriced. Six-dollar gas: carpool, ride a bike, take the bus, change jobs, start a home business. Industry is good at life cycle costing. Six-dollar fuel oil: buy more efficient trucks, practice precision scheduling, insulate buildings, switch to natural gas. Not only can a carbon tax raise the necessary money to pay off the debt and fund life cycle changes. It helps with CO2 emissions and thus with climate change. Taxing carbon near the source would affect the price of plastic too. Making plastic more precious would discourage throwing it away, or into the ocean. If taxes raise the cost of carbon, industry is incentivized to hire more people to better manage the carbon. More people at work, who in turn buy more and pay more taxes.
Taxing carbon as it goes up the smokestack seems complicated to me, maybe it’s not. Taxing it when it comes out of the ground is pretty straightforward. So is taxing it when it crosses the state line, or even city limits in whatever form: fuel, electricity, plastic or refined metal. A carbon tax could replace most other taxes, and in an egalitarian way. Consume more, pay more. Carbon tax would be progressive, but not punitive. It would not discourage innovation, but rather encourage innovation to avoid the cost of consumption.
Naturally the fossil fuel industries will oppose it at first. I am confident they are resourceful enough and diversified enough to make it profitable. They will do just fine no matter what decisions are made, because collectively they have a monopoly. The carbon in the ground is not going to spoil; it appreciates in value as it becomes more rare.
Someday we will learn to do without carbon, but in the meanwhile we can use the carbon tax to improve infrastructure, pay off the $30 trillion national debt and maybe create a sovereign wealth fund like Norway to provide and endless cash stream.
Ken Obenski is a forensic engineer, now safety and freedom advocate in South Kona. He writes a biweekly column for West Hawaii Today. Send feedback to obenskik@gmail.com