American Economists Defend a Carbon Tax

45 leading US economists agree on the need to tax carbon with a tax to combat climate change and encourage the use of clean energies that lead to a greener economy.

Carbon taxes are designed to discourage pollutant emissions, encouraging companies to pay amounts proportional to the harmful gases they emit into the atmosphere. The fiscal pressure can fall on the production or import of fuels or directly on the final products -increasing their price- and therefore, promoting the consumption of cleaner articles or services during the manufacturing process. The benefits are several: the transition to a greener and more sustainable economy, reducing external dependence on fossil fuels and fighting climate change by reducing CO2.

Leading American economists, led by Alan Greenspan and Paul Volcker, jointly defend in an article in The Wall Street Journal the direct tax on carbon as a way to fight against climate change and “send a clear signal to the markets to direct the economic actors towards a future with low carbon emissions “. Despite Donald Trump’s irresponsible negationist stance, support for this economic stance is bipartisan and supported by both Democrats and Republicans, notably Larry Summers, former president of Harvard University and US Treasury secretary.

The treaty signed by the 45 economists is based on the progressive elimination of fossil fuels by the year 2030, a date that all scientific reports consider a limit to curb climate change. The tax plan to tax carbon emissions has been developed by two former secretaries of state, James Baker and George P Shultz. As highlighted from the web site Ecoinventos, Nancy Pelosi, Democrat of California and president of the House of Representatives, promised that the chamber will adopt climate legislation, while some Democratic members promote the Green New Deal model.

The statement includes points such as the importance of providing discounts to all Americans and maintaining a neutral tax revenue – that is, that revenues are reimbursed to citizens and not to the government, accelerating the transition to a more sustainable economy and promoting the economic growth through investment in alternative energies. Whoever pollutes the most, pays the most and what is collected goes to actions to combat climate change.

Many economists have shown that raising prices through taxes is much more efficient than direct government controls on the amount of emissions through regulatory limits. Finland was the first country to implement carbon taxes in 1990, calculating the cost per tonne emitted between 44 euros and 54 euros. Currently, about 45 countries have this system, such as Denmark, Norway or Sweden.