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Carbon tax advocates ‘should stop pretending to be free-market’

Josiah Neeley’s Latest CO2 Tax Argument (real conservatives, libertarians will not be persuaded)

By Robert Bradley Jr. — May 3, 2018

“Substituting CO2 taxation for existing levies is not the tax debate from the conservative/free market side. The debate is about the flat tax versus a consumption tax as fundamental tax reform. And, hypothetically, if Malthusian decarbonization were to come about, what would be revenue-neutral?”

“In Neeley’s defense, he switched sides assuming that Obama energy policy would continue at the federal level. That way, he could argue [in his lucrative new position] that a CO2 tax was the least worst policy compared to cap-and-trade and existing command-and-control (still a weak argument). But Trump won, and the tide went out… [leaving] Neeley exposed an energy/climate progressive (statist).”

“The conservative/libertarian position is to not price or otherwise regulate carbon dioxide. Eliminate intervention, do not introduce it. Reject Mathusianism’s ultimately anti-humanistic, deep-ecology worldview.”

In “Confessions of a former Carbon Tax Skeptic,” Josiah Neeley of the pretend free-market R Street Institute, pens his latest case for supporting a federal tax on carbon dioxide (CO2).

He is playing defense–and convincing few real conservatives and libertarians. His lawyer-like brief for pricing CO2 ultimately rests on climate alarmism and the Malthusian worldview, as much as he minimizes or ignores this baggage. As such, R Street’s energy director become virtually indistinguishable from Far Left carbon-tax proponents James Hansen, Bill McKibben, and Al Gore.

Bad intellectualism and bad cosmetics, indeed.


Neeley’s op-ed published last week in the Washington Examiner is parsed in red; I indent and comment in black.

Hi, my name is Josiah, and I am a conservative who supports a revenue-neutral carbon tax. To many people, especially those on the Right, that may seem like an odd combination. In fact, some people might assume that if I’m for a carbon tax, I can’t really be a conservative.

Why yes, his attempt at humor aside. A big double-digit salary increase did just this. It is an open secret that Left funding has created two front (fake) “free market” think tanks regarding climate/energy (if not more): Neeley’s R Street for “conservatives” and the Niskanen Center for “libertarians.” It is known that very large salary increases have been offered for turncoating on the climate issue for key staff (as much as doublein one case concerning an IER employee).

In Neeley’s defense, he switched sides assuming that Obama energy policy would continue at the federal level. That way, he could argue that a CO2 tax was the least worst policy compared to cap-and-trade and existing command-and-control (still a weak argument).

But Trump won, and the tide went out. The real energy policy debate is not about picking your poison. It is about energy freedom. A carbon tax (and the rest of it, such as his support for wind power subsidies) have left Neeley exposed as an energy/climate progressive (statist).

I can understand the skepticism (although, sadly, my bank account doesn’t bear out the dump truck theory). I used to be a carbon tax skeptic myself. Over time, however, I found that the arguments I deployed against a carbon tax were chipped away until they felt more like excuses.

Yes, you were a critic–and a pretty good one. Tell us more about your conversion experience. And explain how a reversal of federal policy away from climate activism/alarm has made your case somehow stronger.

What are the arguments against a carbon tax? To begin, carbon tax skepticism is often rooted in climate change skepticism. This can take a variety of forms, ranging from thinking climate change isn’t happening to believing global warming is actually a good thing.

This is a vague, confusing summary of the physical science debate about CO2 emissions. The debate is not about “climate change skepticism.” The debate is about the weak, weakening case for climate alarm, leaving the clear benefits of CO2 fertilization. It is about the positive side of “global lukewarming” from the enhanced greenhouse effect. Neeley (and R Street) clearly do not want to summarize physical-science trends, an intellectual oddity.

Another main argument against a carbon tax is it would be damaging to the economy and it would be regressive — hurting low-income households the most. Finally, carbon tax skeptics make a political argument: Even if a carbon tax could work in theory, it’s never going to happen, and if it did, we can’t trust government to implement it the right way.

Correct except for “never going to happen“.  A carbon tax is a real threat, a key battle ground, a “commanding height,” between statism and freedom. Avoiding forced decarbonization is crucial given the ecological (not just economic) problems of wind power and central-station, on-grid solar.

“Even if a carbon tax could work in theory …” is the perfect knowledge, perfect implementation argument that classical liberalism rejects coming and going. This gets straight to the Mises/Hayek argument against central planning–in this case, global government to “plan” climate.

Note that Neeley is for a tax but does not specify how much. What will it be based on, and how it that not scientism? What if the tax is too “high” or “low” from the “right” perspective–a reason to not introduce a new fiscal regime in the first place?

While each of these concerns are valid, it’s possible to structure a carbon tax in a way that avoids them.

In the real world–or in your head? The latter assumes perfect knowledge about the alleged problem and perfect implementation of the alleged solution…. Classical liberal theory, anyone?

Imagine equity adjustments … border tax adjustments …. Two areas of more government intervention to “correct” prior intervention…. Classical liberal theory, anyone?

Concerns about the economic costs of a carbon tax, for instance, can be addressed by making the tax revenue-neutral. In other words, revenue generated from a carbon tax can be used to cut other more burdensome taxes, thereby canceling out the economic cost of the tax even before environmental benefits are considered.

And setting up a bar at AA meetings could encourage responsible drinking. It is incredibly naive to believe that giving government a NEW revenue source will not leave existing government revenue sources in full play. CO2 taxation is a qualitative expansion of government, not only a quantitative one.

Why carbon dioxide? Why not sugar or red meat? Or X, Y, Z?  Is libertarian theory about taxing “bads”? And why doesn’t Neeley want to debate whether CO2 is a “bad” to begin with?

“Revenue neutral.” For whom? Over what time period? What are the rules, and if this is more than a mental construct, would a constitutional amendment be necessary to achieve “neutrality”?

For example, a system where half the revenue from a carbon tax were used to cut payroll taxes, while the other half were used to cut capital gains tax rates, could boost overall economic growth while protecting low-income workers.

Substituting CO2 taxes for existing levies is not the tax debate from the conservative/free market side. The debate is about the flat tax versus a  consumption tax. And, parenthetically, if Malthusian decarbonization were to come about, what then would be “revenue neutral”?

A revenue-neutral carbon tax could also side-step arguments about climate change, since such a tax “swap” could be appealing even if it has no effect on global warming. Art Laffer, the intellectual godfather of President Ronald Reagan’s supply side economics, claims to be agnostic about global warming, but still favors a revenue-neutral carbon tax because of the potential for economic growth.

Neeley would love to “side-step arguments about climate change.” And he is correct to note that his tax might (“even”)  have “no effect on global warming.”

Art Laffer? This is just a name drop. All of the arguments made here against Neeley apply to the very brief, unsubstantiated claims of Laffer in the linked video. Public Choice? Equity adjustments? The “right” tax?

It is circular reasoning to claim I (Neeley) is right because of Laffer made the same arguments. Laffer, by the way, urges humility toward the issue of global warming. Might his views be different now (versus 2012) that temperatures have been flat and Trump has put the issue into political play in unexpected ways?

Of course, we would all like taxes to be as low as possible. But unless you are an anarchist, you have to concede that some amount of tax revenue is necessary to fund the government. A revenue-neutral carbon tax offers the benefit of redirecting taxation away from things we want more of — like work and investment — and toward things we want less of (or at least don’t care so much about). Taxing carbon emissions is a better way to go about raising revenue, both economically and morally, than taxing work and investment.

Libertarian tax policy is not about the Malthusian agenda of taxing industrial progress. Public finance 101 is about a broad  tax base that does not tax politically incorrect goods.

” … toward things we want less of (or at least don’t care so much about)” sounds like a let-them-eat-cake argument.

In addition, a carbon tax provides an alternative to existing and potential environmental regulations. From the Clean Power Plan to vehicle efficiency standards, the law is riddled with burdensome regulations that would become redundant if a carbon tax were achieving the same goals at a much lower cost. In fact, since a carbon tax would have the side effect of lowering emissions of non-greenhouse gas pollutants, even some non-carbon-related regulations could be repealed as part of an overall carbon tax deal.

This pre-Trump “inevitability” argument is no longer an excuse for surrender to climate alarmism/forced energy transformation. Conservatives and libertarians are on the offensive against Malthusian statism. They do not want to pick a poison–they want to defeat the worldview and public policies of the Progressive Left.

What about the political argument? One of the most common responses I get when I lay out my case for a conservative carbon tax is that the Left will never agree to it. Implicitly, this criticism seems to concede that a revenue-neutral carbon tax is good conservative policy; so good, in fact, that liberals wouldn’t support it.

Of course the Left will not agree to a carbon tax that is premised on taking away regulation/intervention elsewhere. They want all  all-the-above intervention to make energy more expensive and control/cap human progress.

If Neeley does not see the game plan for pricing carbon dioxide by any means–why the Left foundations are supporting R Street and paying his salary premium–he is naive indeed.

It’s probably true that some on the Left would not support a conservative carbon tax. Some prominent environmental groups opposed a 2016 ballot initiative in Washington state that would have established a revenue-neutral carbon tax because the money went to tax cuts rather than environmentalists’ pet projects. On the other hand, there are also left-of-center folks who sincerely care about climate issues and would be willing to support a revenue-neutral carbon tax even if it came from conservatives.

Ditto to my response above.

More fundamentally, though, since when has conservative support for a policy depended on whether it was acceptable to the Left? Plenty of policy ideas start out with minimal support, only to gain ground as people come to see the merits of the position.

Bad ideas with minimal support do not need to grow–they need to die.

A conservative carbon tax would roll back environmental regulation, reduce the overall tax burden, and provide a solution to an environmental issue that is a growing concern to the public.

Fantasy. Public Choice, the study of government incentives and practices in a Democracy, is an intellectual touchstone to conservatives and libertarians–Neeley should study and apply it to the climate-tax debate.

” … provide a solution …”  Is the author a climate alarmist? (Tell us more and why) And please tell us how the tax will “solve” the climate “problem.” Specifics please. (The RFF climate calculator computes the energy-price effects of a range of carbon taxes–please take the last step to show how your carbon-tax choices affect temperature, sea level rise, etc.)

” … an environmental issue that is a growing concern to the public.”Neeley needs to persuasively tell us whether this “issue” is real or exaggerated. But does he want to go there?

It’s a good idea rooted in conservative principles, and principled conservatives should support it.

False. The conservative/libertarian position is to not price or otherwise regulate carbon dioxide.

Eliminate intervention, do not introduce it.

Reject Mathusianism’s ultimately anti-humanistic, deep-ecology worldview.

Free-market wealth and adaptation to change, natural and/or anthropogenic–not energy rationing and poverty.

Josiah Neeley and R Street should stop pretending to be free-market. They should support CO2 deregulation and the end of all energy subsidies, prominently including those for for wind and for solar.

Neeley’s argument and plea is Orwellian, even postmodernistic. Real conservatives and libertarians who haven’t taken the dough are/will be dead set against a carbon tax.