Saturday, October 23, 2021

With energy prices going up, now is the time to consider a variable rate carbon tax.

Carbon taxes seem like good tools. Even Biden doesn't promote them because of side effects. A carbon tax is thought of as being regressive to poor folks who still have to commute to work.

One idea, I think about, is a variable rate carbon tax. Impose it during times of low fossil fuel prices and cut it back, or take it off, during times of high fossil fuel prices. It would be a variable tax.

This could prevent fossil fuels from undercutting renewable energy sources during times of cheap fossil fuel prices.

Today, lower income people are paying more for energy anyway now that the price has gone up again.

A better way to help low income people, than cheap fossil fuels, is to create new money (Modern Monetary Theory) and give it out for stimulus during times of low prices. This was done during the pandemic and it seemed fairly successful.

Economists often say you don't want to raise taxes during a recession as that just pushes the economy down further. My idea of a variable carbon tax would do just that. Raise taxes on fossil fuels that usually do go down in price during a recession.

Still, the stimulus idea can counterbalance that.

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