[oldpond]

Carbon tax is pure economic foolishness. Imagine there's one pipe with smoke coming out of it, and imagine there's another pipe with a lever. If you pull the lever, bags of money will come pouring out of the pipe. That's the carbon tax. The thinking is that the pipe with the smoke will stop belching, but it won't. There's no direct connection between the pipes. We HOPE drivers will drive less if the carbon tax hits their pocket book, but there is no guarantee. It's like changing the interest rate and hoping the economy will improve.

[Angostura]

> There's no direct connection between the pipes. We HOPE drivers will drive less.

There are quite a few studies that show that this actually happens. You can have a look at Google Scholar if you want.

Don;t forget, its not just 'will drive less', it is 'will prefer lower carbon alternatives', etc. Fee and dividend basically makes it expensive to pollute and puts cash in consumers' pockets so that they can afford cleaner alternatives.

[oldpond]

I think we should place a royalty on the pipelines, not the pumps. Take 10% from everything that flows down the pipeline, and use that money to drive us into the clean energy age. Where else are we going to get the funds to fix this enormous problem?

The problem with using consumer taxes to fund these things is that the consumer has to consume the planet in order to save the planet. If I don't pay enviro-levy taxes at the cash register, my district can't afford waste removal. If I don't buy enough gasoline, we won't collect enough carbon tax to pay for these wetlands we need to build.

[bryanlarsen]

In the end the consumer pays for everything, so there's very little difference placing the tax on the producer or consumer.

[jogjayr]

> We HOPE drivers will drive less if the carbon tax hits their pocket book, but there is no guarantee.

Gasoline costs twice as much in India as the US, and the average income is far less. People drive a lot less, use public transport, build more densely, and purchase more economical vehicles - small cars, motorcycles, scooters. Liquefied natural gas (LNG) kits are very popular even on passenger cars (LNG being cheaper).

An SUV is virtually unheard of as a family car (unless you're a powerful politician, movie star, or other bigwig) and even a full-size sedan marks you out as rich. I've never seen a pickup truck being driven for passenger transportation.

Why do you think prices don't change behaviors? It's a pretty fundamental facet of human behavior.

> It's like changing the interest rate and hoping the economy will improve.

Don't central banks do exactly that? They cut rates in recessions (to promote spending) and increase them in boom times (to tamp down inflation).