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The L.A. Times today ran an editorial in favor of a Carbon Tax, which got me thinking.

One way to make a carbon tax more palatable and cause less disruption to the market would to start with a very, very small tax that increases geometrically, and use the money collected to help businesses up-grade their facilities.

For example: start with a tax of five cents per ton emitted (or 100 pounds or 1000 tons – I don’t know the math here) then double it every year for ten years. Thus, year 1 = 5 cents; 2 = 10 cents; 3 = 20 cents; 4 = 40 cents; 5 = 80 cents; 6 = $1.60; 8 = $3.20; 9 = $6.40; and ten = $12.80 per xxx of carbon emitted.

The money collected goes into a public/private Carbon Reduction Bank (CRB) that invests the money conservatively. Businesses would be able to apply for a below-market to zero interest ten-year loan – secured by real property — to upgrade their equipment to reduce their carbon footprint. After a period of time, twenty years perhaps, all of the money left in the bank is used for alternative energy research and/or infrastructure.

We can take this a step further and ask the environmental community to stand behind their beliefs: allow individuals and groups to donate money to the CRB with a fifty-cent on the dollar federal government match, building the reserves of the CRB that much quicker.

By starting with a low tax we can build up the funds needed to help businesses upgrade and with the below market cost of the loan neither business nor the consumer will be adversely affected. Further, it is a tax that actually helps business and as such might attract the support of the few remaining moderate Republicans in Congress.

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