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Carbon tax being considered at home and abroad

Last week, Fox News released a United Nations survey which suggested “innovative” ways to fund global development projects, including a tax on financial transactions and a global carbon tax on rich countries.

“Indeed, the 1997 Kyoto Protocol to the 1992 United Nations Framework Convention on Climate Change mandates only that higher-income countries make specific targeted reductions, as those countries are responsible for most of the man-made concentrations of CO2 in the atmosphere and are best able to bear the economic burden,” the survey said.

“In this vein, a tax of $25 per ton of CO2 emitted by developed countries is expected to raise $250 billion per year in global tax revenues,” the survey continued.

The carbon tax is being debated in the United States as well.

In August, Democratic Congressman Jim McDermott of Washington introduced a bill that would create a carbon emissions permitting system, placing an initial maximum price of $18.75 per ton of carbon which would then steeply rise to $131.25 per ton of carbon over a decade.

The Managed Carbon Price Act of 2012 aims to reduce carbon dioxide emissions by 80 percent of 2005 levels within 42 years of its enactment, and the Treasury Department would issue permits which are not allowed to be traded. Permits could only be purchased from the Treasury or refunded by them.

The proceeds from the tax going to a trust fund where 25 percent would go towards deficit reduction and 75 percent would be spent to offset price increases for the public.

Under the bill, coal, petroleum, natural gas, methane, and other substances are classified as greenhouse gas emitters and subject to the tax.

McDermott cites a report from the Brookings Institution which estimated that a gradually rising carbon tax — 4 percent above inflation per year — starting at $15 per ton would initially raise $80 billion. This would rise to rising to $170 billion by 2030, and $310 billion by 2050.

“The American people care about the deficit and they’re worried about climate change–and we can fix both without hurting the economy,” McDermott said in a statement about his bill.

“My bill would reduce carbon emissions, and it returns all the money to consumers and deficit reduction. Businesses want this kind of predictability, consumers need to be protected, and we need to step up and address our climate and fiscal issues,” McDermott continued.

Earlier this year, Senate Majority Leader Harry Reid of Nevada and Democratic California Sen. Barbara Boxer both expressed hopes of that a carbon tax would be considered on the Hill this year.

There has also been some movement among conservatives for a carbon tax as well, mainly led by former Congressman Bob Inglis of South Carolina who advocates for a revenue neutral carbon tax which would be offset by lower other tax rates.

Under Inglis’s plan green energy subsidies would go away, but the price of emitting would be included in carbon-heavy fossil fuels.

“Right now we tax income, labor and industry, but we don’t tax the negative externality associated with the burning of fossil fuels,” Inglis said. “If you attach the negative externalities, the hidden cost, to those fossil fuels, then the economics would be set right for the challenger fuels to succeed in a fair competition.”

“Mitt Romney’s Economic Advisor Greg Mankiw, Exxon-Mobil, the American Enterprise Institute and other conservatives have backed this concept because they know we have to wean ourselves off of carbon emitting energy sources, and do it in a way that doesn’t hurt our economy and makes sense for businesses,” said McDermott, naming conservative figures who he claims agree with the idea of a carbon tax.

However, not all on the right agree with Inglis as aides of both House Speaker John Boehner of Ohio and Senate Minority Leader Mitch McConnell of Kentucky have spoken out against a carbon tax.

“A carbon tax would… do next to nothing to lower global temperature, harm American manufacturing competitiveness, create a new revenue stream based on behavior modification, and harm low-income Americans,” writes Derrick Morgan, vice president of domestic and economic policy, of the conservative heritage Foundation.

“Energy supplies can be delivered and new supplies created through the private sector rather than through mandates, regulations, taxes, and subsidies ordered by government,” he continued.

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