News

Executive summary

The Carbon Washington carbon tax proposal is revenue neutral, with about 70% of the carbon tax revenue going to reduce the state sales tax by a full percentage point and the remaining revenue divided between reductions in manufacturing taxes and funding for the Working Families Rebate, a state-level bump-up of the federal Earned Income Tax Credit. (more…)

Our friends at the Washington Business Alliance are giving a bit of push-back against carbon taxes:

Only a high carbon price, in excess of $50/tonne, will materially alter electricity generation given the dispatch order of plentiful, cheap coal and natural gas. Transportation fuels are relatively inelastic, similarly requiring a high price and long-term commitment to meaningfully impact emissions.

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If there’s one thing everybody knows about carbon pricing, it’s that there’s not much effect on consumption of transportation fuels. In econ-speak, the explanation is that demand is very inelastic: a price increase of (say) 10 percent reduces consumption by much less than 10 percent. In plain English, the explanation is that driving is something that people “have to do”, so price changes don’t have much impact on how much driving people do. (more…)

Here’s our new economist sign-on letter with preliminary signers. (More expected once schools come back in session!) If you are a PhD economist and want to sign on, please email info@carbonwa.org.

Economist Sign-Ons 2014