Public Opinion and the Carbon Tax
Ryan Avent and Megan McArdle debate why the public, who want to Do Something™ about global warming, balk at having a carbon tax as part of the solution. To Avent, it comes down to a lack of marketing and the lack of substitutes for driving in much of the country:
Personally, I think opposition can be explained almost entirely by lack of public understanding and by a real absence of any marketing of the idea. I expect that most Americans don’t grasp or get the notion that taxing something reduces the quantity of that something consumed; rather, I imagine the tax is perceived as a way to fund technologies that might fight climate change. And while wonks love carbon taxes, few politicians have embraced the policy, so few people are out there publicly making the case for such a tax. Of the Democratic presidential contenders, only Mike Gravel has really stood up for higher gas taxes, which isn’t exactly helpful to the issue. Of course, if only one of the front-runners embraced it, they’d probably be quickly skewered by his or her peers. It would be nice if Democrats could, as a party, get behind the issue, making it easier for individuals to speak out about it.
Thinking about it a bit more, though, I think that opposition also stems from the fact that most Americans can’t respond all that well to higher gas prices. If you just bought a house a 45 minute drive from your office, what are you going to do when a gas or carbon tax doubles your pump price? Hybrids aren’t cheap, and now’s not the best time to flip that suburban home. There are simply limited opportunities for most drivers to substitute away from driving. Which is yet another reason that we ought to be spending more on transit. Transit systems are helpful in reducing emissions outright, and they also reduce the level at which any potential carbon tax must be set in order to achieve results—as a good substitute for driving, transit makes demand for gasoline more elastic.
McArdle attributes the lack of support to voter self-interest:
I’d say they understand [the carbon tax] all too well: a tax will make it more expensive for them to drive, forcing them to do less of it. If they didn’t like driving right now, they wouldn’t be doing so much of it.
This is true of a lot of policy plans for which advocates claim a groundswell of mass support: people support them in abstract, but in actual particulars, they are against them. People support universal healthcare–until the majority who are perfectly satisfied with their health care right now hear the details of the plans, and the taxes required to pay for the plans. People like wars, but not the part where we spend a lot of money and soldiers die. People think we should do something about the environment–but only as long as it doesn’t involve driving less, or buying smaller, more fuel efficient vehicles and homes, or giving up the long-distance plane flight to Disneyworld, or . . . well, when you come right down to it, what Americans have so far proven willing to do is buy biodegradeable cleaning products once a year, and waste a lot of carbon dioxide talking about how the government should do something.
I’ll certainly agree there’s an element of the general public tendency to support the general case without supporting the specifics, or the public’s simultaneous desire for low taxes and high spending, at work here. Commenter Thorley Winston also reminds us that “one of the “selling points” behind a carbon tax is that there would be some sort of corresponding reduction in other taxes (usually either payroll taxes or income taxes) to make it revenue neutral. Many people (rightfully) think that if you agree to a new tax on carbon in exchange for a promised reduction in another tax, all you’re going to ultimately end up with just a new tax as the promised reductions in other taxes would either never materialize or just be reversed soon afterwards.”
My guess, though, is that things are closer to how Avent sees them: Pigouvian taxes like the carbon tax have an inside-the-beltway cachet to them that is lost on the public at large, perhaps in part out of ignorance about the purpose of this particular tax. It doesn’t exactly help that other taxes designed to correct negative externalities from individual behavior, like higher cigarette taxes, usually wind up being diverted to other “pressing” needs instead of offsetting the externalities–to the point the state comes to depend on the revenue generated from the behavior it wanted to stamp out in the first place. Add in a healthy dollop of public ignorance and the affectively-loaded word “tax,” and presto, you have public opposition.