By Ari Natter
WASHINGTON, D.C.--A tax on carbon dioxide emissions could raise $1.5
trillion, according to a Massachusetts Institute of Technology report that said
the revenue could be used to stave off budget cuts as Congress seeks to reduce a
looming federal deficit.
The report, Carbon
Tax Revenue and the Budget Deficit: A Win-Win-Win Solution?, released
Aug. 27, examined the effects of a carbon tax starting at $20 per ton in 2013
and rising 4 percent annually.
According to the report, such a tax would cut carbon dioxide emissions 20
percent below 2006 levels by 2050, encourage the use of renewables, and reduce
“Whether we cut taxes or maintain spending for social programs, the economy
will be better off with the carbon tax than if we have to keep other taxes high
or cut programs to [rein] in the deficit,” John Reilly, an author of the study
and the co-director of MIT's Joint Program on the Science and Policy of Global
Change, said in a statement.
The report, which comes as Congress seeks ways to reduce the federal deficit,
says the revenue provided through a carbon tax could provide an alternative to
tax increases and cuts to defense spending and social programs, and could allow
an extension of the Bush tax cuts that are due to expire at the end of 2012.
However, the report's authors warn that “while in principle it is possible to
get very positive results from a carbon tax, in practice” it depends on the
One, the Managed Carbon Price Act of 2012 (H.R. 6338), introduced earlier in
August by Rep. Jim McDermott (D-Wash.), would place a carbon tax on fossil fuels
but would set aside most of the revenues to be refunded to consumers, with the
remainder being used for deficit reduction (149 WCCR, 8/2/12).
Still, many analysts remain skeptical that Congress has the appetite to enact
carbon tax legislation anytime soon.
Climate legislation that would have required mandatory cuts in greenhouse gas
emissions passed the House in 2009, but the Senate version collapsed in