Following up on the news that the American Enterprise Institute hosted a secret meeting with liberal groups to try to build GOP support for a carbon tax, the conservative Heartland Institute has issued a release stating “strong objections to such a plan.”
In the statement, Heartland President Joseph Bast said:
The idea of a tax swap – a carbon tax in exchange for a cut in capital gains, for example – is the Holy Grail of many economists. Tax a ‘negative externality’ instead of investment, and everyone wins. Even I agree with that thinking. The problems are:
(a) Carbon dioxide is not a negative externality, it is a measure of energy use, and energy – as Julian Simon and others have pointed out – is the ‘master resource,’ the single most important input into our economy, the source of prosperity, innovation, and opportunity. Taxing CO2 emissions is WORSE, not better, than taxing capital gains. The only reason to view CO2 as a pollutant is if you believe it causes climate changes that could be harmful to humanity or the natural world. The emerging consensus of scientists and economists is that CO2’s effects are either too small to be noticeable or will produce net benefits, not harms.
(b) In the history of taxation in the United States, it is difficult or perhaps impossible to find a new tax that has led to the elimination or permanent reduction of an existing tax. New sources of tax revenue invariably result in higher government spending. Taxes and spending are already too high and are contributing to an economic crisis. No one who understands these basic truths can also support a carbon tax.
Bast does not mention another possible reason for weighing in. The AEI event included Eli Lehrer, president of the R Street Institute. That organization was founded by people who broke away from Heartland because of its stance on climate change. Lehrer had been vice president at Heartland.