The Gonzalez carbon tax and dividend plan

by John McClaughry

Rep. Diana Gonzalez (P- Winooski) has introduced a bill (H.531) to create a carbon tax and dividend plan for Vermont.

In a commentary promoting her measure on Vermont Digger, she pointed out that notable Republicans James Baker and George Shultz advocated such a measure. They did (WSJ 2/7/17), but we need to look closely at just what they actually advocated:  a large revenue-producing Federal tax on carbon-dioxide emissions that they claim would “put America in the driver’s seat of global climate policy.”

Under the Baker -Shultz proposal, the Federal government would distribute all of the net tax revenue as a “carbon dividend” among all American families.

The remaining two features are border adjustment for carbon content, requiring tax rebates on exports and “fees” (formerly known as “tariffs”) on imports from “countries without comparable carbon pricing policies,” and,  at some future time, the elimination of unnecessary Federal clean air regulations.

This combination, they say, “would strengthen the economy, help working-class Americans and promote national security, all while reducing regulations and shrinking the size of government.” This truly requires a willing suspension of disbelief.

Even if one bought into the Baker-Shultz plan nationally, it clearly could not be done by one state alone, even California. Rep. Gonzalez’ bill may be an amusing thought experiment, but it’s no model for Vermont (or anywhere else). And she would have more credibility if she forthrightly called her carbon tax what it is – a tax, not a “fee”.

John McClaughry is vice president of the Ethan Allen Institute.

{ 1 comment… read it below or add one }

Jim Bulmer May 6, 2017 at 1:40 pm

Am I missing something? We tax and then return the money? That’s insane. We create a new department to handle this? How much of these returnable tax dollars will be needed to pay for all of this? We should be spending our time on more useful pursuits. This just one example of why former Representative Job Tate was right on about the length of the legislative session. Do the important stuff and go home. The added weeks give these people too much time to get into mischief.


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