When it comes to taxes and carbon-dioxide emissions, Monica Prasad, a sociology professor and faculty fellow at the Institute for Policy Research at Northwestern University, argues in a New York Times op-ed on March 25 that the U.S. should follow the lead of that economic powerhouse Denmark.
Denmark? That’s right.
The piece is titled “On Carbon, Tax and Don’t Spend.” According to Prasad, Denmark has the right idea – slap a carbon tax on industry producing CO2 emissions, and then use the revenues to subsidize other energy sources.
Prasad writes: “What did Denmark do right? There are many elements to its success, but taken together, the insight they provide is that if reducing emissions is the goal, then a carbon tax is a tax you want to impose but never collect… Denmark avoids the temptation to maximize the tax revenue by giving the proceeds back to industry, earmarking much of it to subsidize environmental innovation. Danish firms are pushed away from carbon and pulled into environmental innovation, and the country’s economy isn’t put at a competitive disadvantage…”
This is a new idea? It’s a slightly different spin on the raise-taxes-and-subsidize-politically-favored-energy scheme. It basically is the same story that we hear over and over again, that is, tax the market and let government … well … spend. Prasad simply hopes that politicians will only spend on energy endeavors. Good luck on that.
Shifting from a market-driven energy system to a government-guided energy system inevitably raises costs, and serves as a competitive disadvantage for our economy. Simply saying that this economic fallout does not exist and does no harm in a New York Times op-ed does not make it so. Denmark has not repealed the laws of economics.
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