Political scientists are skeptical about the feasibility of a carbon tax. Why would Congress raise taxes on a broad section of the American public?
I may not live along enough to find out if a carbon tax eventually becomes a reality, but I suspect that it is more likely to occur than many people assume. Before discussing carbon taxes, let’s consider another product with an interesting history.
When I was young, a very large proportion of American adults smoked cigarettes. People smoked almost everywhere, and even nonsmokers like me didn’t much mind. We were used to it. You had to be there to understand that it seemed much less bad than you’d think. Cigarettes were taxed, but nowhere near as heavily as today.
Then cigarette smoking gradually went out of style. The proportion of adults who smoked fell steadily, and is now a fairly small fraction of the population. Smoking became associated with lower class workers. More and more people saw smoking as a dirty habit with nasty negative externalities. (The negative externalities are overrated, but I’m looking at perceptions.) Smokers were seen as anti-social. Society responded with very punitive and hugely regressive taxes on cigarettes. (There were also large implicit taxes associated with the legal settlement agreed to by the major cigarette companies.) These punitive taxes would not have been politically acceptable in 1960s, when a large proportion of Americans of all classes smoked cigarettes.
When I first moved to southern Orange County I was shocked at the number of Teslas I saw on the road, especially in affluent areas. Five years later there are predictions that electric cars are the wave of the future, and even the traditional car companies are planning to dramatically ramp up production of electric vehicles. Many experts predict that in a few decades most new cars will be electric. Indeed many areas are planning to ban the sale of gasoline cars in another decade or two. The price of car batteries has been falling rapidly.
Let’s say these plans for an electric car future come to fruition, and that in 2040 or 2050 only relatively poor people who cannot afford new cars are still driving old clunkers using gasoline. How will society regard those people still driving cars with gasoline engines?
You might not think there’s anything disgusting about a car driving by you belching exhaust out its tailpipe. Fair enough, but in 1965 I didn’t think there was anything disgusting about someone sitting next to me at a bar smoking a cigarette, it seemed normal. What we find disgusting is almost purely subjective.
[I’m repulsed when I read of all the horse manure on the streets of NYC in the 1800s. But when I grew up there was lots of dog poop that people didn’t bother picking up, at least in Wisconsin. My daughter’s generation would find the 1960s to be disgusting. Another example is spitting on sidewalks, which used to be common. One or two more generations and Americans will be disgusted that people of the 2020s wore their shoes indoors.]
In my view, by 2040 or 2050 the politics of a carbon tax will begin to look a lot like the politics of a heavy tax on cigarettes looked in the late 20th century–increasingly feasible.
PS. I realize that a carbon tax hits more than just gasoline, but the political opposition to a carbon tax comes mostly from the fact that Americans are heavy users of this highly visible product, and also that there are huge regional differences in gasoline consumption. By 2040, I suspect that not much electricity will be generated in the US using coal.
READER COMMENTS
Jon Murphy
Apr 5 2022 at 1:47pm
I do suspect you’re right, but I also suspect the resulting tax will be less-than ideal. Like how the cigarette tax generally morphed from something akin to externality to now being a cudgel, I suspect carbon taxes will morph in the same way. Rather than get a carefully crafted policy aimed at optimal carbon levels (however defined), I suspect we’ll get a blunt instrument meant more to subsidize alternative energy rather than internalize an externality.
Mark Z
Apr 5 2022 at 2:37pm
Doesn’t this basically mean a carbon tax will become politically feasible only once it’s become nearly redundant, because few enough people will still drive gasoline cars anyway for it to induce political backlash?
MikeW
Apr 5 2022 at 4:54pm
Good point.
Scott Sumner
Apr 6 2022 at 1:03am
“Doesn’t this basically mean a carbon tax will become politically feasible only once it’s become nearly redundant,”
Perhaps, although carbon dioxide comes from many sources beyond gasoline, so it still might have some benefit.
BS
Apr 5 2022 at 6:19pm
>You might not think there’s anything disgusting about a car driving by you belching exhaust out its tailpipe.
That’ll change, too. Even now you might not take particular notice of emissions of contemporary vehicles, but your nose most likely will respond if a 1965-era vehicle drives past.
Benoit Essiambre
Apr 5 2022 at 7:07pm
Yeah 2040 to 2050 is when the effects of global warming will be visibly and frighteningly accelerating (eg. https://images.app.goo.gl/7egqUwYxB6wbL2nj7 ). One thing you can count on to spring humanity into action is last minute panic.
Todd Kreider
Apr 6 2022 at 9:30am
The assumptions behind the highest lines, RCP8.5, aren’t realistic and in the past few years more climate scientists are suggesting that it should no longer be included. Excluding the impossible upper RCP8.5 assumptions, the range for average sea level rise by 2100 is 0.3 meters to 0.6 meters.
MarkW
Apr 5 2022 at 7:10pm
I’m still something of an EV skeptic (as I have been an autonomous vehicle skeptic). Orange County is just about the ideal environment for an EV (little need for heat and not that much for A/C either along with a lot of wealthy folks who aren’t averse to conspicuous consumption). But we’re not that many years away from producing those vehicles that will of average age in 2040. Right now, the average age of a vehicle on the road is 12 years and that number has been steadily increasing. So figure the average-aged vehicle of 2040 will be a (overwhelmingly gas-powered) 2027 model.
I think the real challenge isn’t battery price so much as energy density (to provide sufficient range in places that, unlike Orange County, are very or very hot much of the year) and charging infrastructure. Charging times for EVs are bad enough and that’s assuming you don’t have to wait in line for a charger. I suspect a lot of auto companies are way out over their skiis in thinking that the shift to electric is going to happen in the coming years.
Andrew_FL
Apr 6 2022 at 1:17am
It’s fun to fantasize about preference cascades that will grind our civilization into the dirt!
Todd Kreider
Apr 6 2022 at 9:39am
Scott doesn’t say how high a carbon tax should be. In order to lower the average global temperature in 2100 by even 0.1C, a global carbon tax would need to be over $120 per ton. Currently, Americans will not consider such a high tax to say nothing of the Chinese and Indians.
Philo
Apr 6 2022 at 12:12pm
“[I]n 1965 I didn’t think there was anything disgusting about someone sitting next to me at a bar smoking a cigarette . . . .” Fair enough, though in 1965 you were nine or ten years old.
Michael Rulle
Apr 6 2022 at 4:06pm
Your main theme is people can adapt to anything if they are forced to. I agree with that. But it does not mean it’s good–or bad—in and of itself. I really dislike cigarette smoking and have since I was a child–even as my mother was a smoker—(as my mother, of course, she was exempt from any negative thoughts!).
The fact that taxing cigarette smoking —and even outlawing it in restaurants—-probably decreases smoking (I am not really sure that is true–but I will assume it for now), does not decrease its “criminality” (by analogy, since literally it is not a crime) in my mind. It’s just another government collection scam– and more immoral than when the mob sold undertaxed cigarettes—or individuals selling “Loosies”
This is so obvious it need not even be argued. Perhaps if the taxes were used to decrease other taxes for smokers (they are the one’s generating the revenues after all) it would not be as “criminal”.
That is how I view carbon taxes—-another one of those taxes we get charged without having to send a wire or write a check. Even if I believed that CO2 were as dangerous as the craziest of the global warming alarmists, I would still be against it—-as there are better ways to decrease CO2—without hiding in plain sight.
Capt. J Parker
Apr 7 2022 at 12:27pm
Today’s cigarette taxes are large and regressive. I’m not sure that that was a response of newly smoking averse society as much as it was the result of slowly evolving tax policy whos primary intent was to raise a certain amount of revenue.
I found this data quite interesting: https://taxfoundation.org/cigarette-tax-revenue-tool/ If you look at the total inflation adjusted cigarette tax revenue for Massachusetts or New York over long periods of time, the story seems to be that cigarette taxes are gradually increased over time to maintain a certain amount of real revenue from cigarettes. This raises the question of whether the intent of cigarette tax policy makers was to punish smokers – discourage smoking or just to raise money. I’d ask the same question about a carbon tax.
Jose Pablo
Apr 6 2022 at 5:45pm
Yes, maybe emitting CO2 ends up being like smoking …
… or maybe it ends up being like drinking and after a time of prohibition roars back to be mainstream again (maybe people will end up driving gas powered cars mostly during the weekends)
Monte
Apr 6 2022 at 6:05pm
And We’re decades away from zero-emission air travel (although we’re starting to see some level of development on the hybrid aircraft front). How will society regard those airlines still flying old clunkers using jet fuel?
Manfred
Apr 7 2022 at 11:01am
Sorry, but I want to strike a different note.
The assumption of this blog entry and of the comments so far is that CO2 is ONLY a negative externality. Thus the tax. But CO2 also has positive effects, unlike smoking. Plants and trees need CO2, to produce oxygen. This feature is not present in other negative externalities (as mentioned, like smoking). So you want to tax something that also produces positive effects?
Everett
Apr 7 2022 at 2:43pm
Cigarette smoking also has positive effects in weight loss and decreased anxiety in the people who use it.
Specifically about CO2 – we don’t need any more that we already have in the air in order to have anything but very marginal gains for its positive effects. For non-marginal gains targeted CO2 usage is much better than generally dumping it into the air. I doubt companies and people who concentrate their CO2 output will be taxed at nearly the rate companies or people who dump it into the air will be.
We’ve got enough oxygen in the atmosphere that even if every photosynthetic organism died tomorrow it would be on the order of ten thousand years before we’d have to worry about oxygen, all else held equal (food and climate are another matter entirely – those deficits would kill us very quickly, with food being the fastest one).
To Scott and others: A big difference between cigarette smoking and ICE car driving is that the later is practically required for many people in order to live a decent, modern life. I hope that some of those CO2 taxes would go to helping the less well off purchase electric vehicles versus current rebates really only helping the more fortunate purchase electric vehicles (the less well off less frequently buy new autos).
Monte
Apr 7 2022 at 4:43pm
There are also good (natural) and bad (anthropogenic) sources of CO2. Natural CO2 is a flow gas that dissipates at a faster rate [see The Biogenic Carbon Cycle and Cattle | CLEAR Center (ucdavis.edu)] than anthropogenic CO2, which is a stock gas that remains in the atmosphere for considerably longer.
Floccina
Apr 8 2022 at 8:32am
I agree with you, that is a likely way that it will go, but it might be better/less costly to remove CO2 from the air and if goes the way you describe CO2 removal will be under used.
The cigarette thing shows that it is dangerous to be in a small minority that does something if there is any cost, real or perceived, to what you do. In many cases we libertarians should defend such people.
I support a CO2 tax with all the revenue spend to remove co2 from the air.
Great post BTW, thanks.
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