Public Opinion and the Carbon Tax
Ryan Avent and Megan McArdle debate why the public, who want to Do Something™ about global warming, balk at having a carbon tax as part of the solution. To Avent, it comes down to a lack of marketing and the lack of substitutes for driving in much of the country:
Personally, I think opposition can be explained almost entirely by lack of public understanding and by a real absence of any marketing of the idea. I expect that most Americans don’t grasp or get the notion that taxing something reduces the quantity of that something consumed; rather, I imagine the tax is perceived as a way to fund technologies that might fight climate change. And while wonks love carbon taxes, few politicians have embraced the policy, so few people are out there publicly making the case for such a tax. Of the Democratic presidential contenders, only Mike Gravel has really stood up for higher gas taxes, which isn’t exactly helpful to the issue. Of course, if only one of the front-runners embraced it, they’d probably be quickly skewered by his or her peers. It would be nice if Democrats could, as a party, get behind the issue, making it easier for individuals to speak out about it.
Thinking about it a bit more, though, I think that opposition also stems from the fact that most Americans can’t respond all that well to higher gas prices. If you just bought a house a 45 minute drive from your office, what are you going to do when a gas or carbon tax doubles your pump price? Hybrids aren’t cheap, and now’s not the best time to flip that suburban home. There are simply limited opportunities for most drivers to substitute away from driving. Which is yet another reason that we ought to be spending more on transit. Transit systems are helpful in reducing emissions outright, and they also reduce the level at which any potential carbon tax must be set in order to achieve results—as a good substitute for driving, transit makes demand for gasoline more elastic.
McArdle attributes the lack of support to voter self-interest:
I’d say they understand [the carbon tax] all too well: a tax will make it more expensive for them to drive, forcing them to do less of it. If they didn’t like driving right now, they wouldn’t be doing so much of it.
This is true of a lot of policy plans for which advocates claim a groundswell of mass support: people support them in abstract, but in actual particulars, they are against them. People support universal healthcare–until the majority who are perfectly satisfied with their health care right now hear the details of the plans, and the taxes required to pay for the plans. People like wars, but not the part where we spend a lot of money and soldiers die. People think we should do something about the environment–but only as long as it doesn’t involve driving less, or buying smaller, more fuel efficient vehicles and homes, or giving up the long-distance plane flight to Disneyworld, or . . . well, when you come right down to it, what Americans have so far proven willing to do is buy biodegradeable cleaning products once a year, and waste a lot of carbon dioxide talking about how the government should do something.
I’ll certainly agree there’s an element of the general public tendency to support the general case without supporting the specifics, or the public’s simultaneous desire for low taxes and high spending, at work here. Commenter Thorley Winston also reminds us that “one of the “selling points” behind a carbon tax is that there would be some sort of corresponding reduction in other taxes (usually either payroll taxes or income taxes) to make it revenue neutral. Many people (rightfully) think that if you agree to a new tax on carbon in exchange for a promised reduction in another tax, all you’re going to ultimately end up with just a new tax as the promised reductions in other taxes would either never materialize or just be reversed soon afterwards.”
My guess, though, is that things are closer to how Avent sees them: Pigouvian taxes like the carbon tax have an inside-the-beltway cachet to them that is lost on the public at large, perhaps in part out of ignorance about the purpose of this particular tax. It doesn’t exactly help that other taxes designed to correct negative externalities from individual behavior, like higher cigarette taxes, usually wind up being diverted to other “pressing” needs instead of offsetting the externalities–to the point the state comes to depend on the revenue generated from the behavior it wanted to stamp out in the first place. Add in a healthy dollop of public ignorance and the affectively-loaded word “tax,” and presto, you have public opposition.
What concerns me about a carbon tax is the inevitable appeal for mercy that will result in various subsidies being offered to an ever-expanding class of exceptions. That in turn will negate the behavioral effects of the tax.
Rather than applying new taxes why not just remove the subsidies on carbon production?
How about postponing such a tax until we are sure it would even help or matter.
More evidence is emerging contesting the idea of carbon dioxide being the driving force behind climate change (formerly known as global warming until it started cooling). It appears carbon dioxide levels followed rather than led historical warming trends.
With the sun and water vapor having a more profound effect on climate how will we tax them?
How about proving that mankind is responsible for climate change and then that a carbon tax will do anything to change the change?
The purpose of pigovian taxes is to soften the negative externalities associated with that good or service.
In this case, a carbon tax is designed to reduce the negative effects of gasoline. Its implementation, which I endorse, should be determined by an analysis of which of its negative effects are worse.
The negative effects or externalities are usually associated with driving:
1) Contributions to Global Warming
2) Greater Road Congestion
3) Greater Congestion may lead to higher probability of accidents with other cars/pedestrians
Personally, I feel the greater of the negative effects are 2) & 3), but mainly, #2 because I hate traffic. A carbon tax that triples (or even more) the price of gasoline near cities will lead to less traffic, which makes my driving experience a lot more enjoyable.
I guess coming from a rural community makes me see more of the “no other options” argument.
Rural Americans often live far from jobs, stores, and services. For example, when I was young, my dad had to drive for 45 minutes to get to work. My mom’s workplace was only 15 minutes away, but jobs are scarce where there are few businesses, so he drove. Many people there are still in that position.
The nearest hospital is only 15 minutes away. Not so bad. But it’s a very small hospital, with limited capabilities. A large number of people who are admitted later need to be transferred to a larger hospital. The larger hospital group affiliated with that hospital is a 45 minute drive away.
Local grocery stores charge high prices. We can drive 30 minutes to get the same items for much cheaper. You’d think that as gas prices go up, the profit in driving so far would go down, and in a lot of ways that’s the case, but in some places it’s not. Stores have raised prices – their costs are higher because of gas prices, too. Which brings up the issue of additional price hikes on goods to cover shipping costs, which I don’t see people mentioning anywhere.
These people don’t drive because they like to. Often, by the end of the week, they are sick of the inside of the car. They drive because they need to get where they’re going, and there is no public transportation in areas like this. A carbon tax would likely help reduce consumption around cities, but for the most part, all it would do for rural Americans is raise costs. And since many of them aren’t making large salaries to begin with – especially in the mid-west, which is still suffering economically – I see a carbon tax as causing more harm than good.
What we need is a viable alternative to gasoline. I can see how a carbon tax, by reducing consumption and thereby lowering profits, would provide companies with some incentive to find another option. I just think that there must be a better way to provide some incentive while not harming families who rely on their vehicles to get the things they need to live.
How about a tax on every new stupid liberal tax?
Mr. Lawrence;
The tone of your article, and your repeated use of the word “ignorance” implies that you believe that only hicks and rubes oppose this tax.
I can assure you that the opponents are,as a group, at least as well informed as the supporters. In fact there is at least one Rube that would likely support this illfated attempt at climate control through taxation… Rube Goldberg perhaps??[lol]
My implication isn’t that “only hicks and rubes oppose this tax.” I was explaining that the contradiction between wanting to do something about climate change (which most of the survey’s respondents agreed with) and not supporting using higher prices as part of the solution has multiple explanations, one of which is widespread public ignorance about policy issues. And there’s plenty of ignorance to go around by voters of all political persuasions, and on both sides of the climate change/global warming debate.
People are upset that gas prices are too high as they are now. And you think that the reason why majorities oppose a carbon tax is ignorance?
People are upset about the price of gasoline because they are incredibly ignorant. The USA has the lowest gas tax in the developed world, by a huge factor. Our gas tax has been constant in nominal terms for more than 15 years, which means of of course that it has decreased steadily in real terms. The gas tax in the UK is $5 per gallon. Think about that.
All that tells me is that the US is the least oppressive of world governments. I think most Americans understand that the citizens of other countries are even more over taxed than we are, and yet most people still don’t want their taxes increased. “Other countries pay more gas taxes so we should to” is a losing argument to most people.
I support a tax on petroleum, because I believe we — Americans — would be better off if we burned less petroleum (however refined) for a variety of reasons, starting with national security. I believe that higher prices (which can come from producers or through taxation) are the most efficient means to reduce consumption. Since I would (at least marginally) prefer that the United States Treasury collect the “higher prices” than the House of Saud or the Islamic Republic of Iran, I’m all for a smooth and predictable tax on petroleum.
I do not agree that the inability of rural Americans to adapt to higher prices is the primary reason why we have not imposed a tax on petroleum (or gasoline). There are not very many rural Americans. Their numbers in most states arre overwhelmed by people who live in cities and suburbanites.
I also do not agree that the typical American could not make massive cuts in their gasoline consumption. They simply choose not to because gasoline remains an excellent value, even if it is much more expensive than it was a few years ago. The proof in this is that nobody is driving more slowly on the highways, even though virtually everybody with two brain cells to rub together knows that most (though not all) cars will get significantly better mileage at, say, 60 mph than 75. People are not driving more slowly to save gasoline because they are still willing to substitute gasoline for time on the road.
Other examples: My company, located near Princeton, New Jersey, draws people from a 60 mile radius. Many of those people could easily carpool with another employee who lives near them, thus cutting the gasoline they consume in commutation by half. I do not know of a single employee who does this. Why? Because they would rather burn hundreds or thousands of dollars a year in incremental gasoline than to share their “space” with another employee or plan their errands differently.
Another example: When I was a kid, I remember that people would turn off their engines at open drawbridges, knowing that they would have a wait of some minutes. I can still hear, in my mind’s ear, all the engines starting when the bridge goes down. Now, when you cross over the drawbridges to the Jersey shore, nobody turns off their engine. Why? Because they would rather burn gasoline to power the airconditioners and entertainment systems than save the gasoline and turn off those creature comforts. Again, even at $3 a gallon, gasoline remains a great value.
I think most suburban Americans could shave 15%-20% off their gasoline consumption without either purchasing a new vehicle or making any meaningful change to their way of life. We do not, because gasoline remains such an outstanding value compared to the things that we would substitute for it — time on the road, other people in our car, or children in the back seat with no video to keep them company.