Today’s Brew 1-7-15

Robert P. Murphy, writing for National Review Online, offers an interesting critique on a possible carbon tax, and he uses supply-side economics to debunk the arguments in favor of a carbon tax.

Taxing Carbon Won’t Help the Economy

Second, even to the extent that a new carbon tax’s revenues were devoted to minimizing the blow to the economy, any politically plausible legislation would be quite inefficient from the perspective of supply-side economics. For example, many proposals include provisions to direct funds from a new carbon tax to lower-income households, since they will be disproportionately hit by higher energy prices. This makes perfect sense from an egalitarian point of view, but it does little to promote economic growth. Suggestions of payroll-tax reductions are poorly suited to unleash entrepreneurs and job creation: On the margin, a given amount of tax reduction would be much better targeted at the corporate rate or the top personal-income-tax bracket.


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