If we are going to have an academic argument – and we really should, if we aren't to just be blabbering off here – we need to see some numbers. We need to know how they are calculated. What's the carbon footprint of these Mexican laborers getting to work 3 to a small-cab truck, or on bicycle, or on BART in the wee morning? And have that compared to the guy in Hamptons with his giant 22-room house here, and other houses elsewhere.
Maybe the Mexican guy's taxes will be close to mine. More than is comfortable. That is fine. Carbon taxes don't have to be the only source of income for the government. But until we can see the actual curves, and the total output per segment, etc., we can't actually crunch out what an effective policy is, and we're writing off what's arguably necessary if we're to fix the problem, because we're probably going to have a hard time cutting back emissions until we associate an economic cost to them.
Doesn't that mean there will be less carbon tax revenue, because we've compelled companies to be more green?
Who pays for the UBI then?
Ideally the carbon tax should fund...nothing! A pure dividend, all monies repaid to everyone. Climate change requires long term thinking, which means it requires an enduring institution, like Social Security. It must not be entangled with the vagaries of the political moment.
You mean... UBI?
But yeah, sounds absolutely perfect, carbon tax plus ubi. Problem is that’s it, it sounds great.
I disagree strongly that the cost for UBI would be untenable in the general context.
For example nordic countries already have UBI in all but name due to all the support the society gives to those in need. We just don't call it UBI because it's split to several parts. And there is political opposition of course based on the strawman that UBI "would make people lazy". Maybe in some "other" cultures it would (I have no idea where, though), but not in the nordics. So no those in need are forced to go humbly from government desk to the next.
"It’s fine to like UBI .. but acting as though either of them would have a significant positive economic impact is completely unsupported by either theory or evidence"
Disagree again. Poverty reduces peoples life outcomes. Having a scheme that reduces generational poverty will improve educational results, thus increasing life time wages, thus increasing consumption and taxes.
" there’s certainly no reason to link them as part of a single policy."
Strongly agreed! UBI and carbon tax should have nothing to do with each other.
(Sorry, I cropped a bit your comment.)
that's basic "social welfare". it's not really universal, it's more for those who qualify. in certain countries you can even opt out of this safety net.
you mentioned "nordic countries", in reality only Finland tried a small UBI experiment that failed.
Finland tried a small UBI experiment that failed.
Failed on what measure? The people in the program reported less stress and more happiness.
The back of the numbers estimates make it sufficiently obvious that the claim that these costs are a miniscule fraction of the additional cost of a UBI for UBIers arguing otherwise to have never attempted to produced a comprehensive overview. Assessing whether people are looking for work is relatively expensive in terms of administrator time, for example. But the administration system ensures that only 2% of the working age public actually get that benefit, not 100% of the population (or even the 20-30% of working age people who aren't economically active but aren't actively looking for work either). There's a reason nobody's doing studies to understand whether you could cover [most of] the costs of paying a benefit to 100% of the population by removing some of the admin staff that check the eligibility of the 2% currently receiving it, and it's the same reason perpetual motion machines aren't tested.
The existence of eligibility criteria ensures that unemployment benefits are, in normal times, paid out to only a small fraction of the population, because only a small proportion of the population is unemployed and looking for work. Eligibility testing admin isn't cheap, but it certainly isn't more expensive just paying everyone. For comparison purposes, according to it's own stats the entire DWP admin bill is in the region of £6b, including all admin for all types of benefit to all ages of people and a typically overpriced new govt IT project. Even if UBI could get that down to zero which it clearly can't, it wouldn't pay for many people to receive a UBI.
And what failed there?
That the people who got UBI did improved on their general quality of life?
Because that is the general idea of UBI and that worked.
In Finland everybody below certain threshold of financial means qualifies. Addict or criminal, no matter what.
"in certain countries you can even opt out of this safety net."
Of course you can opt out. Enforcing a safety net against an individuals choosing would be against basic human rights.
From economic resourcing point of view it's more or less universal and everyone is included unless they really wish to get away from the system. Drug addict or not, criminal or not. Nobody is forced to take the dole, but from resourcing point of view there is no biological poverty (hunger or lack of housing). Nobody can force you to take this aid. And mental illnesses and addiction always create additional problem no high level scheme can likely address.
So it's not a 100% solution to everyone's woes but close to 90% I would say.
"you mentioned "nordic countries", in reality only Finland tried a small UBI experiment that failed."
You are looking this from a too narrow perspective. What I meant was that the social welfare system in Finalnd (my home country and other nordics) effectively already encompasses a UBI scheme. A defacto UBI scheme, in Finland for example, should replace most of existing social welfare schemes except for medical treatment and child allowances.
The basic thesis is this: the society already uses quite a lot of tax funds for social welfare schemes, some of which are administratively complex and expensive. People can have housing and food. Yet they mostly choose to work when they can.
So the typical counterpoints to UBI - it's too expensive and would make people lazy - don't really apply.
The only thing missing in the Finnish model left is to merge the various wellfare schemes into one UBI scheme.
The experiment you commment was not really. It was "the current social system plus some UBI cash". And I would claim it was a success. People said they felt better. This is a tremendous thing! Mental illness problems are becoming a huge issue. Making peope feel better actually helps to combat this, and may even support people enough that they can heal and be able to work again.
Healing from long depression can take years. The UBI experiment was far too short to actively track these individuals.
The social welfare in nordic countries is mostly not income (housing, free healthcare, ...) and is certainly not universal (you lose access to it once you have a job, or you have to pay for it through taxes, and some of the fees are waived for people with low income).
I rally love the social welfare of Sweden et al. but calling that "basically UBI" is missing the point.
"Carbon taxes unquestionably fall hardest on the poor, as do consumption taxes generally."
Yes, but rich people consume and release carbon at a much higher rate than poor people. As a result, rich people would pay into consumption taxes/carbon taxes much more than they would get back in a flat cash payment funded by such means.
If that poor person tax burden is lower than average (even if it's higher percentage of income) redistributive properties of "fee and dividend" scheme would actually lead to increased income.
Let's look at some of some sectors and who would spend more on it.
Energy: the richer you are the more you spend on heating and cooling (just due to bigger homes), some extra appliances, etc.
Food: the most greenhouse intensive type of food is probably meat[1]. The more price sensitive you are the more you will switch to alternatives: either poultry (25% as bad as beef) or more plants.
Transport: unclear: older cars may have worse fuel efficiency, but I would expect more travel with more money
So while it is a tax that benefits the poor, the poor are also paying a higher portion of their income to support it while the Jeff Bezoses of the world remain largely unaffected, can use this disparity to further widen the wealth gap and—for any carbon tax rate that the poorest half of the population could at all afford—continue eating their beef and heating their houses for an infinitesimally small portion of their income.
Meanwhile, the Jeff Bezoses of the world probably have the best means available to lower their carbon emissions. Their wealth could be used to provide public transportation and green energy developments, so I believe that there are more efficient ways to reduce carbon emissions than consumption proportional carbon taxation. Progressively factor income and profit into it instead, and lower other income and profit based taxes to simultaneously reward successful businesses/people with small carbon footprints and make those that benefit the most from poor people driving to and from work pay for it.
Jeff Bezos consumes and releases way more carbon than the average person. Private jets, multiple mansions, a fleet or cars, a private rocket company. He would pay way more into a VAT and carbon tax than a median American. If the UBI is large enough to notice, Jeff Bezos would definitely be affected by the means to fund it.
Meanwhile a person living near the poverty line would get more back than they had to pay in increased prices. On top of the net transfer, they now have a guaranteed safety net without means testing, application procedures, and waiting times that they would still get even if they have to quit a job due to a crappy boss. They can also move cities/states without the fear of loosing their benefits.
Yes, but again, I don't think his carbon footprint has increased proportionally with respect to his income, which if it holds true generally means that a carbon tax in proportion to consumption is regressive in terms of proportionality to income, in which case the poor would be disproportionately affected.
I don't know why you consider it a red herring. Possibly because you haven't understood the argument for why it can be considered a regressive tax (you certainly haven't acknowledged it), but in any other case, instead consider those only a little richer. For example, I can afford living in a large city, near essential services. I can afford living near my workplace. This means I can afford not having a car at all, and if I wanted to, I could afford an electric car. I can afford conscious consumption. In that sense I have better means to minimize my carbon footprint than someone that lives in a rural community, works several tens of miles away in the city because they can't afford to live near opportunities of employment, can't afford an electric car, can't afford to buy locally produced food etc.
The poor may be getting more back than Jeff Bezos (thank god) but the middle class will clearly be the immediately obvious winners in a scheme like this, funded disproportionately by the poor.
So if the poor get back more than they put in, how can they be disproportionately be funding it?
A carbon tax+UBi is not regressive, if the rich pay in more than they get out and the poor get back more than they put in. That is the red herring.
The break even point should occur somewhere in the upper middle class. If it was just a tax by it self you would be right. But the effective tax discount through the UBI makes it progressive.
Sure, the cost gets passed down, but you can only charge consumers so much. If it turns out that industry can't get costs down enough such that they make profit and consumers can afford it, then that is kind of the point of the tax. They need to "spend" less carbon or die out to businesses that can.
Poor people use less than the average amount of carbon, therefore they come out ahead. Rich people will pay more carbon tax than they get back in UBI.
I would question that very much and guess that overall the opposite is true. I don't however have any data, except national aggregates showing that there's a correlation between GDP and carbon emissions (even before accounting for the fact that arguably quite a lot of the emissions of less wealthy nations come from production of stuff for more wealthy nations). Do you have data?
Jeff Bezos, worth $150B, or the same worth of approx. 1M Americans, does not consume nor release carbon 1M times more than an average American.
Proportionally to his wealth, he's much less affected by a carbon tax.
For the same reason, someone below the average wealth and/or income is heavily affected by a carbon tax.
44.40 million metric tons [1]
Average American carbon footprint:
16 tons [2]
Now, I'm sure there's some inaccuracy here, and it's a bit of a stretch to say Bezos is personally responsible for all of Amazon's emissions, but he's pretty clearly in the same order of magnitude as having a million times the carbon emissions of the average American.
[1] https://d39w7f4ix9f5s9.cloudfront.net/26/7f/e1693ffc45db88d8...
[2] https://www.nature.org/en-us/get-involved/how-to-help/carbon....
the central point of your argument is flawed: the rich use orders of magnitude more carbon than the poor do.
further: even if it were true, the goal of a carbon tax is not to be progressive, but to disincentivize fossil fuel production, and to drive behavior toward less harmful alternatives.
This is the case for consumption taxes in general and carbon taxation in particular. This is not contradictory with the fact that the top income decile emits more per capita in absolute than the lowest one.
This is especially manifest for gasoline consumption: richer households consume significantly more of it, but it represents less than 2-3% of their income, while it can reach more than 10% for poorer households.
Indeed, this can and should be offset with a full redistribution of the tax proceeds - either flat or targeted at lower income households - to compensate the inherent regressivity of carbon taxation.
Source: my PhD was on the distributional consequences of carbon pricing.
a) poor people will end with more money than they paid
b) rich people will end with less money than they paid
c) no change in aggregate demand (although minor increase in velocity) so likely little additional inflation
So it still redistributed from rich to poor while disincentivizing carbon heavy processes.
This page (https://citizensclimatelobby.org/household-impact-study/) has a nice chart showing the fees and where they come from for an average household in each income quintile in the USA. The expected fees for each quintile (under a $15/ton carbon fee) are $173, $219, $252, $292, $381. On another page on the same site, you can find that the expected dividend (which just depends on the number of adults/children in the household) is $288.
If we take a flat percentage of the spending and give everyone the same fixed amount, poorer people will profit more than rich people.
Disagree totally on UBI. A rational UBI plan would recover 25%-50% of the UBI somehow. Income tax, a VAT or other mechanism. In addition, a UBI takes pressure and saves costs of other social programs. Directly reduce poverty. Have less poverty. Spend less on other poverty reduction programs. There is also a strong "stimulus" effect. UBI generates economic activity. That get taxed. Government revenue increases.
Considering the benefits, I think it's a no-brainer for countries with a strong enough economy to support it.
A lot of the benefits are unknown, but I suspect some of the biggest wins will be in some of the most intractable problem areas. A big one currently is the town/city dichotomy. Successful cities are very successful. High salaries. Career opportunities. Low unemployment. Unfortunately, much of that is eaten up by inflation local to these cities.
UBI is geo-agnostic income. The effects on cheap, lower income areas could be very profound. Bear in mind that this problem is a graveyard of failed policies. A lot has been tried. Little has worked. This has much better odds.
Fine. UBI of $1000/mo for 200 million people (2/3 of US population) costs over $2 trillion per year. Recover half of it and that’s still net $1 trillion per year. That’s more than 1/3 of the current federal budget. And there is no possible way that it replaces that much in existing spending.
That's not what I meant. It costs something. I think it's a cost that is worth it, and I think it's a cost that's feasible. Nothing is free.
If you want to get into the feasibility of a specific plan, take a look at Yang's proposal, or some other proposal that has been subjected to (and adapted by) technical criticism and analysis by multiple parties.
I'm not saying you'll reach the same conclusions as me, but even highly oppositional analysis don't come to vastly different estimates of net cost. $100bn ballpark differences, not a trillion.
Note that yang's proposal is for a 10% VAT. Most wealthy economies that have a vat, have a 15%-25% rate. The plan is pretty conservative on the taxation side. Also note that nearly all the analysis uses "orthodox macroeconomics," the mix of keynesianism and monetarism that seems to be falling apart as a consensus atm. A different take on money creation (almost any competing theory to monetarism) yields much better estimates on cost.
All that said, you have to consider UBI an economically transformative plan. If you don't think it is, then you probably won't conclude that it's worth it. Impossible is not a rational solution, IMO.
> Also note that nearly all the analysis uses "orthodox macroeconomics," the mix of keynesianism and monetarism that seems to be falling apart as a consensus atm.
Ah, the old “money printer go brr” theory. I wonder how much 1000 Zimbabwe dollars or 1000 Weimar marks or 1000 Venezuelan bolivars will actually buy you.
I would go as far and say that in the optimal case UBI would replace other social programs.
That's exactly why we would want to link it with a transfer like UBI. If UBI requires too much cashflow for your taste, we could always use an expansion of EITC instead. If tax incidence on unemployed is too worrisome, then we can start shifting the EITC more towards a regular NIT.
And with due respect for your best friend, the consensus is overwhelming among prominent economists that a carbon tax is fundamentally a good idea:
Just last week I read an article about the wealthiest 10% causing 50% of the emissions or some similar figure. It's well known that richer countries pollute huge amounts compared to developing ones, but within a country I think it was also shown and seems to make intuitive sense.
> Everything from the products purchased by the poor to their modes of transport are more carbon-intensive than the rich.
Since when are buses and trains more carbon intensive than cars and jets? Or bulk products versus luxury, perhaps even custom ones? Plus that poor people don't have the time to go on holiday in Fiji for two weeks every year (exceptionally so in the USA with no minimum leave).
what? how? if we're talking about the real poor, they typically don't even have a car, take public transportation, or even walk.
meanwhile the very wealthy have private jets or yachts and would be paying a significant carbon tax when using those. so I'm genuinely curious how you got to
> Everything from the products purchased by the poor to their modes of transport are more carbon-intensive than the rich.
To a fist approximation, the carbon tax you pay will be a fixed fraction of all the money you spend in daily life.
Poor people spend essentially all their income every month. The better off you are, the lower a fraction of your income you have to spend each month.
So a poor person will pay X% of their income, while a well-paid software professional might pay X% of 25% of her income.
That's regressive.
But a carbon fee & dividend, taken as a whole, is progressive, rather than regressive, because the poor receive a dividend in excess of the fee they pay, while the wealthy pay more fees but receive the same dividend.
Also, you are missing the target on the parent comments argument. The carbon tax wouldn't affect the poor as much because the UBI is there to compensate for it, that's kind of the whole point. There's nothing about being poor that forces you to emit more carbon when compared to other people, as far as I know.
ie., c. 4 Trillion USD / yr or c. 20% of GDP (20 T)
The total amount taxed in the US is already at that level (4T).
For the carbon tax to raise 20% of GDP, it would need to raise as much as all present taxes do (income, sales, etc.). Levying that much on consumption (ie., obtaining the present total amount of tax merely from products people buy) would raise prices catastrophically.
Total retail sales (https://www.statista.com/statistics/443495/total-us-retail-s...) is c. 6T.
Assuming that most of the 4T comes from taxing the activity represented by retail sales (a very safe bet), you need to get most of 4T from 6T. Ie., you're basically doubling the prices of retail goods -- including food.
1 US gallon = 3.8 litres
$7.84 per gallon = $2.06/€1.75 per litre
Russia €0.55/$0.65 per litre
China €0.80/$0.94
Spain €1.66/$1.95
Germany €1.29/$1.51
UK €1.21/$1.42
Netherlands €1.67/$1.96
I’m not sold on UBI but it does sound possible
edit: Imagine being downvoted for asking for a legitimate source on HN. Because rejecting UBI by making a simple multiplication is a sufficient explanation instead of researching all the secondary effects that a UBI would bring. Yeah, we've solved it there, I guess! Economists should go find some real jobs /s
Being poor means having less or no choices. Low income, no or negative capital. You practically have to go with the cheapest at the moment, even if it is more expensive in the long run.
So, a low upfront cost gasoline car Vs a more expensive electric car with potential lower TCO.
And that doesn't account for the fact that they have no discretionary spending. If everything becomes more expensive, the rich person can simply buy less.
I still think it's a sensible idea, simply because the currently socialised costs (co2 emissions & poverty related ones) become explicit.
And the reason why gasoline cars are as affordable as they are now is that the carbon tax is not here and cars are heavily subsidized in general. Carbon tax isn't even really a tax, it's more akin to removing a subsidy (you cannot pollute for free anymore and make someone else pay the costs)
It may cause people to not go digital but encourage black money, but if government i.e basically us make a decision that's(non digital translation) are not legal in country. What do you think about it?
I see black money, barter system creeping in but in bigger picture what do you think about it
This form of tax will take people with more spending to tax more, so people who live beyond their means will be taxed more and poor people will be taxed less.
With no disrespect intended to you personally, this policy you propose makes no sense. Without putting words in your mouth, it looks to me like “two things I as a progressive like the idea of”, rather than a coherent economic policy.
Carbon taxes unquestionably fall hardest on the poor, as do consumption taxes generally. Everything from the products purchased by the poor to their modes of transport are more carbon-intensive than the rich.
With respect to UBI, the amount of revenue needed to sustain anything other than a token payment is orders of magnitude more than a carbon tax could ever hope to raise. It’s orders of magnitude more than could ever be raised by any realistic tax, actually, but that’s rather beside the point.
It’s fine to like UBI and it’s fine to like carbon taxes, but acting as though either of them would have a significant positive economic impact is completely unsupported by either theory or evidence, and there’s certainly no reason to link them as part of a single policy.