Letter: Carbon tax might help, not hurt us

One common misconception about climate change is that preventing it will hurt or even devastate the economy. While some climate policies could damage the economy, that is certainly not true for all policies.

Economists agree the most effective way to reduce emissions of carbon dioxide from human activities is to put a steadily increasing price on fossil carbon, preferably at the source, and let the price signal spread through the economy. But what is done with the revenue from the price affects the economic impact of the price signal. If, using an extreme example, all of the revenue is literally destroyed, the carbon price would undoubtedly hurt the U.S. economy.

But a collection of papers recently published in the journal “Climate Change Economics” concludes that a national revenue-neutral carbon tax, in which all of the revenue is returned to the U.S. economy, would produce little impact on the economy. And if a border adjustment places tariffs on products from countries without a price on carbon to protect international trade, the economy could even benefit. Accounting for the environmental and health damage avoided makes the case for a revenue-neutral carbon tax even more compelling.