Policy Design for a National Carbon “Cap-and-Divide” Program To Boost Net Incomes While Reducing…
Economic Security Project
131

“ Higher income Americans who use more energy than average would not be fully compensated by the same-share dividend. This would provide incentives to conserve energy. Lower- and middle-income Americans — covering 70–80% of the population — would see their net monthly incomes rise. This would provide a dependable multi-decade source of new non-labor income that would eventually reach thousands of dollars per year per average family.”

This is highly improbable. Those higher-income Americans would quickly cease using carbon. They can afford to retrofit their properties to use solar and/or wind power, buy electric cars, etc… They will quickly exit the carbon market to the maximum extent that they can. What they can’t get out of will get passed on as higher prices to others. The net result of that will be that the only people paying will be those lower- and middle-income Americans that can’t afford to buy their way out. Those at the bottom levels of the income scales will quickly see costs rise faster than any benefits they receive from the system. Bill Gates can afford to convert his properties to green power. The poor schmuck earning $30K/year that heats his/her apartment with gas or oil has no means to converting the heating system they survive by and their landlord doesn’t care how much it costs his/her tenants to heat their apartment.

“This in turn could serve as an anchor of cash support when combined with other UBI sources that are built into our future economy. The carbon income would not be permanent, of course.”

This is exactly why a carbon tax should NOT be the basis of paying for any sort of UBI. Once created and implemented, a UBI will require a constant and reliable source of funding. Stop-gap taxes that only exist for a few years are NEVER a viable source of funds to cover the cost of a long term program.

But for several decades, this will be a significant and politically durable source of money.

Decades? Not even close. The top 10% will cease consuming carbon within 5 years. The top 20% will be done with it within 10 years. Your progressive carbon tax will become a regressive tax paid only by those earning less than about $130K/year and at that point you can no longer afford to fund your UBI. The poor will not only be paying significantly more for everything they need to survive but the UBI program will collapse because those very same people won’t have the money to pay the carbon taxes that fund the UBI program.

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