If you want to reduce carbon dioxide emissions, or more appropriately give people the incentive to choose the 'right' amount of personal carbon dioxide emissions, a per unit tax on emissions equal to the damage caused by the last unit of carbon dioxide emitted will do the trick. But that places a burden on the emitter, so how can we reduce that burden? One option is to reduce distortionary income/employment taxes. Al Gore agrees:
Former U.S. Vice President Al Gore on Monday suggested taxing carbon dioxide emissions instead of employees' pay in a bid to stem global warming.
"Penalizing pollution instead of penalizing employment will work to reduce that pollution," Gore said in a speech at New York University School of Law.
The pollution tax would replace all payroll taxes, including those for Social Security and unemployment compensation, Gore said. He said the overall level of taxation, would remain the same.
"Instead of discouraging businesses from hiring more employees it would discourage business from producing more pollution," Gore said.
I think I need a tissue.
Now if we could just get him to agree to trade carbon credits...
