Talking Carbon Taxes, Free-Enterprise Style

Editor’s note: We’re re-issuing this popular Flashcard to pair with last week’s cap & trade in three pictures.

What’s the best way to make a case for a carbon pollution tax to conservative audiences? Why not speak their language?

Just listen to the outspoken conservatives who favor a tax on carbon pollution. Again and again they talk up carbon pricing with the familiar language of the market, calling for a level playing field and accountability for the true costs of energy, and touting the enormous opportunity in homegrown, free-enterprise energy solutions.

These conservatives also like the idea of swapping taxes from stuff we like—jobs, income, hard work—to something we’d be better off with less of: carbon pollution. In fact, pro-carbon tax conservatives talk about a carbon tax swap as a “golden opportunity,” an “old-fashioned, straightforward” solution, a “win-win” and a “no-brainer.” And they see a tax on carbon pollution as a good way to bolster our national security, strengthen our economy, and create “jobs, jobs, jobs.”

All that said, a carbon tax is still not a slam dunk with all conservative audiences.

Indeed, economist and former American Enterprise Institute scholar, Irwin Stelzer, sees that “Conservatives have before them a golden opportunity to accomplish several important conservative goals, but are so frightened by words like ‘tax,’… and ‘global warming,’ … that they are frozen in opposition to programs they should support.”

And, while many conservatives would prefer market instruments such as a carbon pollution tax to, say, Environmental Protection Agency regulations, most aren’t easily convinced that carbon pricing will actually be truly revenue-neutral—.

But, come on! When the “father of supply side economics,” Art Laffer, says a carbon tax would mean we “can at once clean the air, create jobs, and improve the national security of the United States—a triple play for the next American century,” and George Will (grudgingly) agrees with Al Gore that we should “tax what we burn, not what we earn,” it’s a sure sign of promising common ground.

Here’s a start at finding a common language, based on direct quotes from leading conservatives:

Making the case for carbon pollution taxes

There are growing ranks of conservative leaders—among them, prominent economists, academics, journalists, and current and former elected officials—who’ve been outspoken about their support for a carbon pollution tax. They are making the case for a carbon tax based on deep seated conservative principles. As Republican Bob Inglis puts it, “In reality, conservatives have the answer to energy and climate. It’s free enterprise and accountability.”

George Shultz.

Stability and predictability are good for business.

• “We’ve been on this roller coaster ride. This time it’s important to make it different. Every spike in the price of oil has put our economy in a recession. We want to have more diverse energy resources so our economy won’t be so vulnerable to the oil market… It’s a no-brainer.”—George Shultz, US Secretary of State under Ronald Reagan, now chair of the Hoover Institution’s Shultz-Stephenson Task Force on Energy Policy.
• “It’s a terrible injustice to the business community” that the United States hasn’t passed either a carbon tax or cap-and-trade program, since it creates energy uncertainty …  “Utilities don’t know what to invest in.”—Douglas Holtz-Eakin, former Director of the Congressional Budget Office and chief economic policy advisor for John McCain’s 2008 presidential campaign.

Bob Inglis.

Recognize the Full Cost of Oil Dependence

• “What we pay at the meter and at the pump doesn’t account for the emergency room visits and lost work days triggered by coal pollution, or the blood and treasure spent protecting overseas supply lines, or the chronic and costly risk that rising temperatures pose for our communities and enterprises from forestry to fishing and farming. … Just because these costs are socialized does not mean that they magically disappear.”—Alex Bozmoski, Strategy Director for the Energy and Enterprise Initiative.
• “Many forms of energy produce side effects, like pollution, that are a cost to society. The producers don’t bear those costs; society does. There has to be a way to level the playing field and cause those forms of energy to bear their true costs. That means putting a price on carbon…if we can capitalize on these opportunities, we will have a much better energy future, from the standpoint of our national defense, our national economy, and our national environment, including our climate.”—George Shultz
• “A carbon tax would attach the national security and environmental costs to carbon-based fuels like oil, causing the market to recognize the price of these negative externalities”—Art Laffer, a professor and economist and head of the Laffer Center for Supply-side Economics, and Bob Inglis, former Republican representative from South Carolina who now serves on the board of the libertarian R Street Institute and also heads the Energy and Enterprise Initiative (E&EI), a campaign, based at George Mason University, devoted entirely to “unleash[ing] the power of free enterprise to deliver the fuels of the future.”

Eliminate market distortions

• “Get the prices right and let the competition rip. Because carbon is not priced into the cost of energy consumption—indeed, such consumption is enhanced by the variety of net subsidies accorded the oil industry—we cannot know just how competitive solar, wind and other renewable sources of energy would be in a non-distorted market, or whether they are a drag on the efficiency of the energy market.”—Irwin Stelzer, Senior Fellow and Director of Hudson Institute’s Economic Policy Studies Group (and formerly with the American Enterprise Institute).

• “[A carbon pollution tax is an] opportunity to fix a market distortion that prevents the free enterprise system from delivering the fuels of the future.”—Bob Inglis

Art Laffer.

Unleash the creativity and innovation of the market

• “By making all fuel types accountable for their costs, free enterprise will make clear the best fuels for our future. Reduce taxes on something we want more of—income—and tax something we arguably want less of—carbon pollution. It’s a win win.”—Art Laffer
• “[With a carbon tax,] we would clean the air, create wealth and jobs through a new technology boom and drastically improve our national security.”—Laffer and Inglis

Gregory Mankiw.

Tax the bad, not the good; keep it revenue-neutral

• “A good rule of thumb is that when you tax something, you get less of it. That means that taxes on hard work, saving and entrepreneurial risk-taking impede these fundamental drivers of economic growth. The alternative is to tax those things we would like to get less of. … If the tax on gasoline were higher, people would alter their behavior to drive less. … By taxing bad things more, we could tax good things less.”—Gregory Mankiw, professor and chairman of the economics department at Harvard University.
• “[A carbon tax is] a climate policy based on conservative principles … Let’s do a dollar-for-dollar tax swap that untaxes income and shifts the tax base onto pollution—tax the bad and quit taxing the good.”—Price Atkinson, Energy and Enterprise Initiative.
• “[A carbon tax] is an old fashioned, straightforward way, and it’s obvious that what you tax you get less of.”—George Shultz
• “A tax on carbon … need not swell the government’s coffers—if we pursue a second, long-held conservative objective: reducing the tax on work. It would be a relatively simple matter to arrange a dollar-for-dollar, simultaneous reduction in payroll taxes as taxes on, say, gasoline, increased. Anyone interested in jobs, jobs, jobs, should find this an attractive proposition, with growth-minded conservatives leading the applause.”—Irwin Stelzer

Naturally, there are details and even certain outcomes upon which climate hawks and pro-carbon pricing conservatives may not entirely agree—the role of government and regulations in solutions, for example. But the differences don’t negate the common ground. And it’s worth finding language that helps all of us see our shared values and goals.

Mark Feldman is a writer and communications consultant who works with environmental nonprofits, public agencies, and green businesses. As a principal of Writing Works he helps organizations and businesses communicate effectively and creatively.

Thanks to Todd Myers for his valuable feedback.