NCPA - National Center for Policy Analysis

Carbon Tax Will Kill the Economy, Boost Inflation

November 19, 2012

Many climate alarmists are hoping to use Hurricane Sandy and the re-election of President Obama to spur Congressional action on climate change. The purpose of the tax is to penalize the use of fossil fuel in order to reduce emissions. Many environmental groups are lobbying for a deal on a carbon tax. However, it is unlikely the tax will have any effect other than an inflationary one, says Steve Milloy in Investor's Business Daily.

  • Assume that the United States emits 6 billion metric tons of carbon dioxide (CO2) a year and 40 percent of it accumulates in the atmosphere.
  • The United States adds about 0.31 parts per million (ppm) of CO2 to the atmosphere annually.
  • Even if the United States reduced all emissions as of 2013, by 2100 the United States would avoid adding 27 ppm of CO2.
  • However, this is miniscule compared to the fact that the current level of CO2 in the atmosphere is 391 ppm.
  • Moreover, the Environmental Protection Agency estimates that CO2 in the atmosphere could range from 450 ppm to 950 ppm.

Even if the tax were somehow able to cut all emissions, it wouldn't be enough to offset CO2 levels to curb the effects of global warming. This is especially true considering that other countries like China and India will continue to emit high levels of CO2 despite U.S. policies.

More importantly, the economic impacts far outweigh any benefits derived from taxing emissions. Goods and services like gas and electricity will become much more expensive. Meanwhile, the purchasing power of the dollar will decline, creating a phenomenon many people are familiar with: inflation.

Source: Steve Milloy, "Carbon Tax Will Kill the Economy, Boost Inflation," Investor's Business Daily, November 13, 2012.


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