Massachusetts is on the leading edge of Carbon Tax law. Our state is positioning itself to be the first state in the union to pass a Carbon Tax into law in the country. Other regions of the world have passed Carbon Taxes with mixed success. In British Columbia, Canada, it has been effective and popular. An ineffective Australian Carbon Tax faired worse and resulted in political upheaval. Where an unpopular Carbon Tax was passed and resulted in the conservative overthrow of the progressive movement. The conservative landslide promised and delivered on repealing the Carbon Tax.
The Carbon Tax raises revenue by increasing the cost of carbon fuels. The increase in price is supposed to decrease demand. Unless there are incentives to invest to reduce demand, it is a stick and no carrot. There needs to be incentives to reduce demand; incentives paid by the Carbon Tax itself.
What is more critical to take into account is the recent and significant drop in the price of a Barrel of oil. In July 1014, the price of Oil was around $105/Barrel by the end of October 2014 it was down to the low $80s/Barrel. How will this dramatic decrease in price affect demand?
The there are two fundamental issues of Carbon Tax: One of math and one about policy.
• What is the Carbon Tax Rate?
• Where does the revenue go?
Much will be decided based on who is elected governor in November. Massachusetts has been the home of progressive action many times. It was on the forefront of gay marriage and mandatory health insurance or Romney-care. A few years from now, Massachusetts may become the first state to pass a Carbon Tax. Unlike the business proposal that resulted in the casino law, eventually this law needs to go to the people as a referendum and populist vote.