Posted by:
Steve Dubb
Use carbon fees and fund a public trust, Newsweek's Jonathan Alter says
Want “to save the world and give voters money at the same time?” Newsweek columnist Jonathan Alter asks. In a recent column in Newsweek Alter suggests that adopting Peter Barnes’ proposal for a publicly-owned “Sky Trust,” as Barnes advises in Capitalism 3.0, would provide the best way to achieve these goals.
As Alter explains, a carbon tax could raise as much as $300 billion in revenue. But of course, this also means that a carbon tax would cost American consumers $300 billion in disposable income—a not inconsiderable sum, even in the $13-trillion United States economy. But what if the United States, as Barnes proposes, were to redistribute with one hand what it takes to discourage overuse of energy resources with the other?
The mechanism for doing this is what Peter Barnes calls a “sky trust.” The sky trust is modeled after the example of the Alaska Permanent Fund which since 1976 has sent every Alaska resident a dividend check each year funded by a share of the state’s oil revenues. With the Sky Trust, the funding source, rather than oil royalty payments, would be carbon fees assessed to discourage greenhouse gas emissions. Rather than having the fees go to the government, fees would be returned to the public through annual dividend checks.
So, say $300 billion is raised through carbon fees. Divided by 300 million Americans, this comes out to $1,000 per person. Following the Alaskan model, every American would receive the same amount. By giving all Americans an equal dividend, the plan would ease the burden that higher carbon prices would place on the poor.
As Alter explains, “According to calculations by Barnes and by James K. Boyce of the University of Massachusetts, those earning more than $160,000 a year—who have bigger cars and houses and thus use more energy—would end up paying more in energy charges than they got back in dividends. Those earning less than about $45,000 would end up paying less, and with some extra cash in their pockets. And those in between would find it roughly a wash, though about 70 percent overall would make money on the deal. The country as a whole, of course, would be much better off.”