Over the past two days, I’ve been attending sessions at the Sustainable Opportunities Summit sponsored by CORE. During my time there, I’ve been hearing a lot about the concept of applying a carbon footprint tax to business in order to encourage (or coerce, depending on how you look at it) businesses to examine and improve on the way they are impacting our ecosystem. I don’t want to get into a debate about global warming, if it’s real, or when exactly Florida is going to be washed into the sea. Instead, I’d like to focus this discussion on the pros and cons of a carbon tax.
In my mind, there are two ways to use taxes to modify behavior. We’ll call those two methods the stick method, and the carrot method. The current discussion of carbon tax is one example of using the tax system as a stick, to force businesses into more ecologically friendly business practices. This method imposes a tax which penalizes companies that have a large carbon footprint, but doesn’t provide any help in implementing these changes.
Instead of using the the carbon footprint tax as a stick, the US could alternatively decide to provide real tax incentives to serve as a carrot for companies who reduce their carbon footprint, allowing them to afford to make changes faster, and stay in business. Our government throws useless tax incentives to large industries on a regular basis, like the $18 billion in tax incentives for oil and gas companies which have been under debate in the House and Senate recently. Why not use some of these incentives to promote good corporate behavior instead of supporting an already thriving, multi-billion dollar industry?
While I firmly believe that both individuals and businesses should be aware of their impact on the earth and our air and water supply, and should work towards minimizing or eliminating pollution and contamination that threatens our planet and our health, I generally hate to see companies taxed out of existence.
What do you think?