In 2007, Kevin Hassett of the American Enterprise Institute, said a carbon tax would not only help energy security and attack global warming, it could also raise a quarter as much revenue as the corporate income tax and could be used to cut those rates.
In 2009, Exxon Mobil chief executive Rex Tillerson — in part to slow momentum toward a cap-and-trade system for reducing greenhouse-gas emissions — endorsed the carbon tax and said it should be set “somewhere north of” $20 a ton.
“As a businessman it is hard to speak favorably about any new tax. But a carbon tax strikes me as a more direct, a more transparent and a more effective approach,” he said at the time. He added that “a carbon tax is also the most efficient means of reflecting the cost of carbon in all economic decisions — from investments made by companies to fuel their requirements to the product choices made by consumers.”
But he, too, said it should be revenue neutral.
One leading GOP advocate of the carbon tax just flipped position. House member and Sen.-elect Jeff Flake (R-Ariz.) co-sponsored a carbon tax bill in 2009. But Friday, a spokesman told The Hill newspaper that Flake “has no plans to reintroduce it or support it as part of a tax reform package.”
The American Petroleum Institute (API) opposes a carbon tax. “Anytime we look at an energy issue, be it a tax or regulatory issue, we ask what does it do to promote or inhibit energy production and what is the impact on the American people,” said Jack Gerard, API president. “Clearly, it would increase costs to the American public. Is that what he [President Obama] wants to do? I would think not.”
But compared to the fiscal cliff , even a carbon tax might look attractive. A study by the Massachusetts Institute of Technology said “the economy is better off with the carbon tax than if taxes remain high to maintain Federal revenue.”
“We’ve been just surprised at the number of political groups across the political spectrum considering this,” said Sharp of Resources for the Future. “Contrary to what almost everybody universally would have said two years ago, we have gotten ourselves in such a pickle on the fiscal side of things that it opens up the possibility.”