Now is Not the Time: The Carbon Tax and Its Catastrophic Effect on the Economy

Thanks to Camille (@theconservativegirl on Instagram) for her article on the Carbon Tax and its effects. Read on and let us know your thoughts when you’re done!

You can check out this report from the Congressional Budget Office on the topic of a carbon tax and its impact on our economy by clicking the link below:      
Effects of a Carbon Tax on the Economy and the Environment


“For one thing, a carbon tax is the most straight-forward and efficient strategy for quickly reducing greenhouse gas emissions.” —Sen. Bernie Sanders (I-Vt.) on the Huffington Post


In his article featured on the Huffington Post, Vermont senator and 2016 presidential hopeful Bernie Sanders makes several claims about the “money-grubbing fossil fuel industry,” as well as the imminent threat of global warming, all in an effort to rally American citizens in support of a carbon tax. These pseudo-analyses utilize one-step thinking and fail to assess the disastrous impact such policies could, and will, have on the economy and American families. It is time we reject new taxes and take a constitutional approach toward an efficient economy that will reverse the recession and strengthen international competition. This article will make note of the cataclysmic effects of a carbon tax on the economy.

First and foremost: the point of a carbon tax is to increase energy prices. Studies by the International Panel on Climate Change hold that a carbon tax of $80 per metric ton would raise gasoline prices by up to $0.70 per gallon. High energy costs would work their way through the economy in raising costs of production and diminishing things like income and employment.

Hydrocarbon fuels provide 85% of US energy. An additional 11% incorporates nuclear and hydro power, and the remaining 4% comes from renewable energy. A carbon tax might promote nuclear and hydro power, but it is likely that building hydroelectric dams and new large nuclear power plants would come up against massive political and social opposition. When higher costs drive the economy, America’s capacity for international competition and domestic growth is diluted. According to studies by both the Heritage Foundation and the Energy Information Administration, impacts of carbon taxes may result in employment losses exceeding 1 million jobs and income losses of over 1 trillion dollars by 2030.

A tax has two general categories of cost: the tax revenue (direct burden)—pretty straightforward—and the excess burden, which is one of the economic losses societies suffer from taxes and subsidies. A simple example will denote these different impacts. Suppose a person is on welfare, and is offered a job that pays more than what he receives in welfare benefits. However, if he is taxed at an amount that is too high, his post-tax income is lower than what he would prefer, so he may rationally decide to stay on welfare. The excess burden is both the cost of keeping that person on welfare and the loss incurred from the economy from losing his production. In a Heritage analysis, the tax revenue is rebated directly to taxpayers, and what’s left is a dent in the economy.

As part of the Climate Security Act of 2013, Senator Barbara Boxer (D-CA) and Senator Bernie Sanders (I-VT) proposed a carbon tax.  Starting at $20 per metric ton, the tax would rise by 5.6% each year, reaching $50 per metric ton by 2030. With help from the Heritage Energy Model, which is derived from the Energy Information Administration’s National Energy Modeling System (NEMS), Heritage projected the following economic impacts that would have ensued, had the bill become law:


A GDP loss of $146 billion by 2030.

A family of four losing more than $1,000 of income per year.

A loss of 400,000 jobs by 2016.

A drop in coal production by 60% and coal employment dropping more than 40% by 2030.

Electricity prices rising 20% by 2017 and 30% by 2030.


Even though renewable energy also grew more attractive, it wasn’t enough to make up for lost hydrocarbon fuels. Businesses and households reduced expenses of energy both by doing away with and utilizing more energy-efficient technologies. Even though it is true this may stimulate employment in certain sectors, the net result was a loss in overall employment.

In 2013, a Heritage paper noted the following impacts of a $25 per metric ton tax on CO2, as a side case for the EIA’s Annual Energy Outlook 2012:


A cut in family-of-four income by $1,900 in 2016, leading to an average loss of $1,400 per year through 2035.

Raising the family-of-four energy bill by more than $500 per year.

Gasoline prices would rise by $0.50 per gallon.

An aggregate loss of more than 1 million jobs in 2016 alone.


The analyses of the HEM and NEMS include changes in behavior and investment in energy-saving that firms and households will manage to increase prices. The Annual Energy Outlook 2014, the most current version, also recorded severe job losses and GDP losses exceeding $150 billion for years. The findings of these studies are conclusive—carbon taxes drive up energy costs, reduce income, and cut jobs.

Estimates of a carbon tax’s impact on world temperature do not lend much foundation for the carbon tax, either. The AEO2014 side case for the $25 per metric ton carbon tax holds that the tax would cut energy-related CO2 emissions by 50% over the course of 45 years, but this translates to a moderation of 0.09 degrees Fahrenheit by the end of the 21st century. Is this virtually immeasurable impact really worth the millions of jobs and trillions of dollars lost in income?

Energy is the lifeblood of our businesses and households. The energy that provides almost all of our needs is under attack—politicians such as Sanders and special interest groups are lobbying to tax these reliable resources and administer those tax dollars to certain constituencies. Carbon taxes hold attraction from global warming alarmists, but in the long run, they are economically destructive, and are increasingly jeopardizing for US production.

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