emission rights

[kandrathe]

It would be revenue neutral at the pump, but rather than tax just the consumer, it pushes the taxation back to the importer.

Do you have something against importers? Their math is actually quite easy - if they can't compete with domestic producers, they will stop bringing oil into the country. Then, the government stops making any money at all from the tariff, and the resulting rents all accrue to domestic producers. Three cheers for protectionism!

We are doing this to transition the nation off of a commodity we want to discourage due to the environmental concerns. It is too bad that the oil industry needs to die, and we need to start killing it somewhere.

Government action, by definition, is a type of force. When the party acted upon has done nothing to deserve interference, then yes, the action is unjust. However, the commerce, along with proper and necessary clauses seem to apply here, if ever they would. It certainly is within Congresses power to levy a fair tariff on oil for the purposes of paying for the federal costs for transportation systems.

My argument is certainly not that the Congress lacks the power to do this. Much like you said about the Post Office, my argument is that they should not exercise that power - it would be self-defeating protectionism. What did oil importers do to "deserve interference," exactly? What did US exporters do?

Nothing. When we banned DDT, it wasn't done to punish the manufacturer, or distributors. In fact, many millions of people died due to increases of malaria and other vector-borne pathogens.

I would think that for larger countries, like the US, the terms of trade would be better with a tariff.

Beggar thy neighbour does have the salutary effect of beggaring one's neighbours, thereby making oneself appear wealthier by comparison. It's an entirely illusory "gain," of course, as every sensible economist from Adam Smith onwards has pointed out.* People are not generally made better off by preventing them from making trades they would like to make. Surely a Libertarian does not need this most elementary principle of free exchange explained?

Yes, yes, but... We are not doing this to punish oil importers, OPEC, or the OECD oil export nations. Like I said before, I'm not usually one for government intervention, but preserving the status quo of cheap and abundant energy is fundamental for preserving peace in the world. Running out of oil (not to mention those who seek to prevent man made climate change) is a national emergency.

It would reduce the power of oil exporting nations, and if managed correctly would create incentive for the US to be more innovative now with the vast deposits of fossil fuels it does have (like coal, and oil shale).

Quite the contrary. One does not encourage innovation by discouraging competition. By removing the need for US producers to be internationally competitive, giving them a protected "backyard," they would have less reason than ever to be innovative, rather than merely extractive.

Again, though, from a product price point of view, the change is neutral. The price per gallon would not change, although, non-fuel products, such as plastics might increase in price. It would give domestic providers a slight advantage, What if Canada and Mexico were excluded from the tariff? This would be a boon for North America, yes? But, yes, you are right in that it would work just as well to keep the existing regressive consumer tax in place.

Again, you need to look at the greater scheme. We don't need to jack up the price of energy (fossil fuels in this case). The result would be a shock to the economy, as energy affects the entire supply chain, and the real wealth of the consumer (more money per gas fill means less disposable income). What I propose is to leave oil as it is, but drastically reduce the price for the energy production we do want to move toward. Over time, consumers will favor cars like the GM Volt, since the operation costs will be much, much less, and the supply of "fuel" will be freely available.

You seem to have this very strange blind spot for subsidies and protectionism. Taxation, you rail and rant about as if it were your own personal cross to bear to Calvary. And debt? Don't even get you started.

But, as soon as we're talking about the government providing incentives and tax breaks for XYZ, the notion that this all must be paid for with either taxes or debt does not seem to disturb you particularly. It's all the same stuff - take money from someone, give it to someone else - right?

I'm not really advocating paying much for this. I'm advocating the government facilitating it through loans, and risk abatement (meaning that the government would allow new ventures to float through periods of insolvency). I don't really see "tax free" as a subsidy, and this would not be forever, but only until the market has fundamentally shifted. Much like the railroad act, which created incentives for the wannabe tycoons to lay track everywhere, this would be the governments way of "getting out of the way" and encouraging the building of a brand new energy infrastructure. One that will cost many billions of dollars. In order to take that risk, the investors need to know that the rewards are substantially worth it, and the risks are manageable.

There is a market-clearing price for these commodities. Holding a price for something as fundamental as energy below that level is tough. Government subsidizing the consumption of energy would be incredibly expensive, wasteful, and almost certainly self-defeating. Unlike a targeted carbon tax, which would discourage generating carbon and and encourage almost everything else, this plan would encourage non-carbon energy consumption, and discourage almost everything else (through taxation or debt). Seems inefficient to me.

The tricky part would be providing enough incentive to make the change, but not so much that we over heated the economy. I believe a carbon tax would just drag everything down, and wouldn't encourage much of anything. Maybe once you have 50 percent or more of the industry carbon free, then a carbon tax would be the kick in the pants needed to get people to shift more rapidly. But, to just engage in taxing carbon without having alternatives would be homicidal. Like taking the junkie off smack cold turkey, where we'd probably just die, or at least many of us would.