Is Washington Ready For a Carbon Tax?

By Amy Harder

Should President Obama and Congress pursue a carbon tax?

The policy proposal has been garnering increasing attention among Washington’s think tank and academic leaders across the ideological spectrum as a way to simultaneously combat global warming and cut the ballooning federal deficit. It’s unclear whether it will gain traction in Congress, given the dicey politics of new taxes and climate change, let alone the combination of the two. To wit: Republican leaders in the House have signed a “no climate tax” pledge, indicating a steep path to passage through the House. These challenges aside, some experts say that Congress could impose a carbon tax in exchange for a lower income-tax rate as part of the comprehensive tax reform that lawmakers hope to tackle next year.

What are the policy pros and cons of a carbon tax? How does a carbon tax compare to other policy proposals, such as cap-and-trade, in terms of both political feasibility and policy? Can Congress overcome the political hurdles to pass such a measure? If so, what would it look like?

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