Carbon Tax and Dividend Endorsed by Irish Prime Minister

Carbon Tax and Dividend Endorsed by Irish Prime Minister

The Taoiseach (Prime Minister) of Ireland, Leo Varadkar, has just endorsed a carbon tax in which all funds go to a direct cash dividend. This came in a letter to the Green Party of Ireland and has been confirmed by the press. Varadkar was responding to questions posed by Eamon Ryan during a session of the Dáil (Parliament). Ryan calls for “an increase in [the] carbon tax in which every single cent would go back to the Irish people—a dividend.” Eamon Ryan is the Green Party’s leader in the Dáil (Parliament).

Ryan considers Varadkar’s response to be an endorsement of the Green proposal. The Green Party has issued a press release. In it, they express pleasure to hear that the government likes combining a carbon tax with a cash dividend but stress that they consider alternative energy and transportation to be their highest priority in addressing climate change.

In his address to the Dáil and in an interview on the Irish Times’ “Inside Politics” podcast, Ryan calls for an increase of €20 per ton in the carbon tax, with an increase of €5 per ton each year until it reaches €90 per ton. The tax revenue would be entirely returned to the public as a dividend. (If you consult the podcast, discussion of the carbon tax and dividend begins at 20 minutes and forty seconds).

Illustration posted by Eamon Ryan on his Twitter feed.

“Every single cent that will be raised will be returned with a check in the post.” In the podcast, journalist Hugh Linehan makes it clear that this would be cash that goes directly to everyone in Ireland. Ryan points out that those with lower incomes would come out with more cash than they have to pay in increased taxes. He sees this as a way to avoid a popular revolt against a carbon tax like the one Emmanuel Macron has seen in France. He hopes that this will retire the debate over the carbon tax and achieve larger changes in energy and agriculture. “[The carbon tax and dividend] will deliver maybe five, ten, fifteen, or twenty percent of the change we need.”

The Irish Times is considered the paper of record in Ireland.

The Green Party (Camhaontas Glas) has two members of the Dáil Éireann. If they gain more seats in the next election, they are considered a likely coalition partner in a future government.

The current government is run by Fine Gael, a party that caucuses with Conservative parties in Europe but seeks to be seen as pragmatically responsive to poverty and ecological issues. Ireland has seen campaigns to prevent increased water charges and to promote public action on housing.

The Irish Times has surveyed government leaders in Ireland who seek to emphasize that carbon tax increases would be “revenue neutral”, returning all funds to citizens as a dividend. The dividend is seen as a way to meet the climate change obligations set by the European Union without harming lower-income people.

In the discussion of the carbon tax and dividend, there is no discussion from the government or the opposition parties of the carbon tax and dividend as a basic income. Green Party Leader Eamon Ryan is very careful to stress that the dividend is just a small part of a plan to make Ireland ecologically responsible.

A year ago, the Irish Times ran an opinion piece in which Ian Goldin presumes a basic income would be financial destructive and would replace existing programs. Basic Income News columns have demonstrated the method Goldin uses to make his calculation is flawed. The mistake here is to calculate gross costs instead of net costs. This means that basic income can be implemented without cuts in other social provisions. Calculations show that the poverty rate could be brought down to zero if three to four percent of a country’s GDP is dedicated to a basic income.

The idea that a carbon dividend is a basic income has not arisen in the Times or in the debate in the Dáil. The term “basic income” has not come up in the discussion of the carbon tax. This reflects a pattern found elsewhere. If a dividend is debated as an answer to poverty, it faces more scrutiny than if it is debated as a repair for the regressive effect of another policy.

Basic Income Ireland and Social Justice Ireland promote the idea that basic income has emancipatory potential. The idea that three to four percent of a country’s GDP could fund a dividend that abolishes poverty is still not being debated by any of the parties currently in the Dáil.

US: Prominent Republicans call for carbon tax and dividend

US: Prominent Republicans call for carbon tax and dividend

A group of prominent Republicans has released a proposal for a carbon tax and dividend as an alternative to the Obama administration’s regulation-based approach to mitigating climate change.

The proposal would provide Americans with a small basic income, as it calls for revenue from the tax to be “returned to the American people on an equal and quarterly basis.”

 

A carbon tax (or fee) and dividend has often been noted as a possible means of financing a basic income in the United States, endorsed by groups such as the Citizens’ Climate Lobby and Chesapeake Climate Action Network and even recommended by the California State Senate in an August 2016 vote.

While campaigners typically focus on the taxation of carbon as a strategy to mitigate climate change, basic income supporters call attention to the “dividend” component: in most proposals, revenue from the carbon tax would be distributed to all individuals in uniform cash grants paid out on a regular basis (e.g. monthly or quarterly). The amounts of dividends vary across specific proposals, but are small, relative to a full-fledge liveable basic income. For example, the California Senate resolution was estimated to lead to payments averaging $288 per month to family of four. And economist James K. Boyce and With Liberty and Dividends for All author Peter Barnes argue for a $200 monthly dividend to individuals, funded by taxes on pollution and other rents from “universal assets”. However, dividends funded by a carbon tax meet the main criteria for a basic income: they are paid in cash, with no strings or conditions, to all members of a community on a regular basis.

 

A group of prominent US Republicans has now issued a call for a carbon tax and dividend, which they present as a “free market” solution to climate change.

The Climate Leadership Council (CLC) includes, among others, two former Secretaries of State (James Baker III and George Shultz), a former Secretary of the Treasury (Henry Paulson Jr), and two former Chairmen of the President’s Council of Economic Advisers (Martin Feldstein and Greg Mankiw).

The CLC’s proposal, laid out and defended in “The Conservative Case for Carbon Dividends” (February 2017), describes its dividend proposal as follows:  

All the proceeds from this carbon tax would be returned to the American people on an equal and quarterly basis via dividend checks, direct deposits or contributions to their individual retirement accounts. In the example above [a carbon tax beginning at $40 per ton and increasing over time], a family of four would receive approximately $2,000 in carbon dividend payments in the first year. This amount would grow over time as the carbon tax rate increases, creating a positive feedback loop: the more the climate is protected, the greater the individual dividend payments to all Americans. The Social Security Administration should administer this program, with eligibility for dividends based on a valid social security number.

In justifying the dividend, the CLC states, “We the People deserve to be compensated when others impose climate risks and emit heat-trapping gases into our shared atmosphere” — a claim reminiscent of much discourse surrounding basic income.

The CLC also notes that the dividend would be especially beneficial to poor Americans: “The Department of Treasury estimates that the bottom 70% of Americans would come out ahead under such a program. Carbon dividends would increase the disposable income of the majority of Americans while disproportionately helping those struggling to make ends meet.”

 

The CLC’s proposal has gained the support of other advocates for a carbon tax and dividend.

In remarks to CNN, the Citizens’ Climate Lobby spokesperson Steve Valk called the proposal “an aggressive, properly designed carbon tax that employs the power of the free market to do the work is more effective and efficient than regulations.” Peter Barnes, whose 2014 book With Liberty and Dividends for All helped to popularize the idea of pollution taxes and dividends, also welcomes the conservatives’ proposal. Barnes states:

“This is a real step forward for conservatives. They are proposing to pay dividends to all Americans with money generated by pricing a previously unpriced common asset, the air we all breathe. These eminent Republicans effectively agree that the air belongs to everyone, one person one share. In this sense they are heirs to the late Republican governor of Alaska, Jay Hammond, who created the Alaska Permanent Fund on the same premise, with oil rather than air as the co-owned asset.”

Michael Howard, Professor of Philosophy at the University of Maine and Chair of the US Basic Income Guarantee Network, has written a Basic Income News feature in response to “The Conservative Case for Carbon Dividends.” Howard calls the publication a “very welcome development” in both the fight against climate change and the movement for basic income. A carbon tax and dividend, he claims, is “closest analogue on the national scale to Alaska’s Permanent Fund Dividend that we can hope for in the near term.”

 

Other responses, however, have been less enthusiastic.

In particular, some environmental advocates denounce the proposal’s demand that existing regulations on pollution be repealed. The National Resources Defense Council, for example, released the following statement in response to the CLC:

What’s important is that we cut carbon pollution fast enough to avoid the worst impacts of climate change. Putting a price on carbon could be an important part of a comprehensive program. It can’t do the job alone, though, and is not a replacement for carbon limits under our current laws.

Likewise, Howard agrees that “unless the carbon tax is set high enough and is assured of rising regularly, to give away the EPA’s authority to regulate carbon emissions might be a fool’s bargain,” and doubts that carbon tax alone is sufficient to combat climate change. As he notes in his Basic Income News feature, reduced consumption, development of alternative technologies, and assistance to poor countries in their transition to non-carbon energy sources might be necessary components of the solution. 

 

Members of the CLC met with White House officials on Wednesday, February 8 to present the proposal.

However, the White House has yet to comment on any planned action, and most commentators agree that it is unlikely the Trump administration will pursue any climate legislation (even if that legislation is proposed and defended by prominent Republican statesmen) in the foreseeable future.

 

More information:

Climate Leadership Council, “The Conservative Case for Carbon Dividends,” February 2017.

Martin S Feldstein, Ted Halstead, and N Gregory Mankiw, “A Conservative Case for Climate Action,” The New York Times (op-ed), February 7, 2017.

Chris Mooney and Juliet Eilperin, “Senior Republican statesmen propose replacing Obama’s climate policies with a carbon tax,” The Washington Post, February 8, 2017.

John Schwartz, “‘A Conservative Climate Solution’: Republican Group Calls for Carbon Tax,” The New York Times, February 7, 2017.


Reviewed by Dawn Howard

Pollution photo CC BY-NC 2.0 Christina Carter 

VIDEO: Economist James Boyce on Basic Income, Carbon Tax and Dividend

VIDEO: Economist James Boyce on Basic Income, Carbon Tax and Dividend

In a recent interview and article, economist James K. Boyce defends a universal basic income of $200 per month, funded in part by taxes or fees on carbon emissions and financial transactions.

Boyce, an economics professor at the University of Massachusetts at Amherst and program director at the Political Economy Research Institute, recently co-wrote a article on the topic with entrepreneur Peter Barnes, who authored the 2014 book With Liberty and Dividends for All. The article was originally published as “$200 Dollars a Month for Everyone? Universal Income from Universal Assets” on Triple Crisis, a blog devoted to finance, development, and the environment. It has also been republished on Medium as “How To Pay For Universal Income”.

Boyce and Barnes argue that a modest basic income could be funded from “universal basic assets” — wealth that is rightfully owned by all members of society, such as that which is derived from appropriation of the commons (e.g. extracting minerals or timber from the land or releasing pollutants into the atmosphere). They argue that universal basic assets also include a portion of wealth generated from society’s financial and legal infrastructure.

On their view, a portfolio of such commonly held assets could (and should) be used to fund a citizen’s dividend of $200 per month to all Americans, distributed automatically via wire transfers to individuals’ bank accounts.

Boyce provides further explanation of the proposal in an interview with Kim Brown of the Real News Network (see video below).

In the interview, while elaborating upon the idea of universal basic assets, Boyce compares and contrasts his proposal with Alaska’s Permanent Fund Dividend (PFD), which provides all Alaskan residents with an annual basic income ($1022 in 2016) from the revenues on a permanent fund created from royalties on the sale of the state’s oil. Boyce notes that whereas Alaska’s PFD incentivizes drilling for more oil, a carbon tax and dividend would dis-incentivize carbon emissions, thereby promoting more sustainable energy production.

Boyce further articulates his ethical justification for a citizen’s dividend in response to a question concerning whether it is fair to give money to those who don’t work for it: “All we’’re talking about is returning to people the money that comes from uses of assets we all own or should own in common. So, it’’s not about handing out free money. It’’s about not letting people use those assets for free. That’’s the real handout.”

YouTube player

A transcript of the interview is available on the site of the Real News Network (“Universal Basic Income: A Solution to Inequality, Economic Instability, and Climate Change,” November 21, 2016.)


Cover Photo: CC BY-NC-ND 2.0 Pembina Institute

CALIFORNIA, US: State Legislature Recommends Carbon Tax and Dividend

CALIFORNIA, US: State Legislature Recommends Carbon Tax and Dividend

On Tuesday, August 23, the California State Senate voted to approve a resolution calling on the United States Congress and President to enact a national carbon tax-and-dividend.

The proposed tax would apply to fossil fuels, and be applied based on the amount of carbon dioxide that the fuel emits when burned. While it specifies no exact tax rate, the resolution suggests that the tax start low and increase steadily through the year 2050. The intent of the policy is to encourage a shift away from carbon-based fuels, with the ultimate goal of reducing emissions to 80 percent below 1990 levels by 2050.

The dividend is not the focus of the resolution; it is merely stated that “all tax revenue should be returned to middle- and low-income Americans to protect them from the impact of rising prices due to the tax.” The resolution further mentions that, according to a study by Regional Economic Models, a family of four would receive an average of $288 per month after 10 years.

The Citizens’ Climate Lobby (CCL), a California-based group that has been advocating strongly for a carbon fee-and-dividend, applauded the resolution — with 35 volunteers traveling to the state capital to voice their support.

In the United States, the carbon tax-and-dividend has been gaining currency as a possible way to introduce a basic income. For basic income advocates, of course, the interest is in the dividend: a universal and unconditional cash payment distributed monthly to individuals or households. Camila Thorndike of the Chesapeake Climate Action Network spoke about the connection between basic income and carbon tax-and-dividend policies on a recent edition of The Basic Income Podcast. The policy is one under consideration by the newly-formed National Campaign for Basic Income, whose founding member Steve May recently wrote an editorial in favor a carbon tax and dividend in Vermont. 

For an analysis of one such proposal, see Michael Howard’s article in Basic Income News: “Size of a Citizens’ Dividend from Carbon Fees, Implications for Growth” (September 14, 2015).

The full text of the California Senate resolution is available here.


Reviewed by Robert Gordon

Photo CC BY-NC 2.0 John Watson

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