Fresh off the news that GOP no-tax-pledge kingpin Grover Norquist has lost a majority of the House of Representatives, news comes (from the National Journal, h/t Climate Crocks) that Norquist has now determined that:
a proposed “carbon tax swap”—taxing carbon pollution in exchange for cutting the income tax—would not violate his pledge.
This raises a very interesting possibility, especially in regard to the "fiscal cliff". A lot of people (including me) believe that the GOP in the current congress with never, never vote for a tax increase. Not even in the lame duck session, and not even to make a deal. It's just not in their DNA.
But in January, having gone over the cliff, the dynamic changes radically in our favor. At that point, pretty much any tax reform will involve reinstating the middle class tax cuts from 2001, so the GOP will then be able to pat themselves on the back for "lowering taxes", even if the 1% get left out of the deal (which they will, because the President has made it clear he will not support extending tax cuts for the rich). But that dynamic only happens after we drop off the cliff, and that is the moment to strike when the iron is hot.
So what would happen IF ... (and it's a pretty big if) ...
1. ... the income tax cut for the middle class was paired with a source-captured fossil carbon tax?
2. ... the combination of the carbon tax plus lower income tax was not merely revenue neutral, but revenue-lowering? In other words, 2 dollars of income tax relief for every dollar of carbon tax revenue?
Would that get enough Republican votes to pass the house? I think it would, especially with Grover's blessing in hand.
What is the carbon tax, and how would it work, and why would it be a good thing?
Basically, we put a price on the import and domestic production of fossil carbon (coal, oil, and natural gas), based on the carbon content of the fuel. Since there are only a relatively small number of fossil carbon sources (in the tens of thousands, rather than millions), it's easy and cheap to administer.
The effect of the tax is to raise the price of fossil fuels. And that means that ALL non-fossil energy sources get a competitive advantage in the marketplace. A carbon tax can make the difference between an alternative energy source being competitive, and being another economic non-starter.
This could be big. For climate change, this could be HUGE.