The Oregonian’s Muddled Mess on Pollution Taxes

Evan Manvel

Today’s Oregonian editorial against a tax on pollution (carbon tax) shows an impressive combination of timidity, poor logic, and ignorance.

First, timidity - the editorial starts by arguing the struggles the state has had with Cover Oregon should prevent it from taking on anything hard. It backs up its argument by quoting wild hyperbole of an unnamed industry group.

The editorial is notably silent on the contents of the carbon tax report the legislature had commissioned. The Oregonian’s own news story reported:

The [pollution tax] idea received a far more positive response [than it had recently] from an Oregon legislative committee as a group of economists and scientists provided an overview of a detailed proposal due out Nov. 15.

“This could really help rejuvenate many rural parts of the state,” said Sen. Alan Bates, D-Medford. “The devil is always in the details, but I'm tantalized.”

Much of the reason for that enthusiasm stems from the idea that a tax on carbon would be revenue-neutral, meaning that whatever the state collected from taxing various forms of energy would ultimately be returned to members of the public and businesses through means such as lower income and business taxes.

Some background: taxing pollution is one of the most widely supported ideas in economics literature, and is generally used as the perfect example of a Pigouvian tax that improves market signals and functioning. But it's not just theory. After Congress implemented a tax on ozone-layer depleting chemicals in 1989, it's lead to a true environmental success story. The Oregon legislative report noted a pollution tax on carbon could bring two billion dollars to households and businesses each year -- about $550 for every Oregonian.

Why are we even considering this? We know without taking action on global warming, our world’s economy is facing a 5 to 20% loss of GDP – costs that would land disproportionately on the world’s poorest. The World Health Organization estimates global warming will cause an additional 250,000 deaths per year between 2030 and 2050. None of this reality - that demands serious, bold action - is mentioned.

Next up – poor logic. The Oregonian’s editorial board makes an impressively bad argument: “the effect of such a tax in a single state on global warming would be negligible, and perhaps nonexistent.” This might be thought of as the Zeno’s Paradoxes argument – and indeed, it can be hard to imagine dividing a big problem into small solutions (perhaps the wedge piece visualization from Princeton professors Socolow and Pacala can help).

But it’s just sloppy thinking. By that logic, the editorial board must never walk a mile, because any single step’s progress towards getting a mile is negligible. Similarly, they must never vote, as any single vote’s chance of changing an electoral outcome is negligible. And they must never buy a newspaper, as the chances that purchasing one newspaper will create a vibrant fourth estate are nonexistent. The reality is much different – countries and states and people across the planet are taking actions to fight global warming, and it’s time Oregon did its share of leadership on the issue.

Finally – ignorance. The editorial states “it has the uncertainty that comes with trying something new. Plenty of states have sales taxes, but none have carbon taxes.” That’s an impressive side-step of the existence of state carbon trading markets, and, more to the point, British Columbia’s carbon tax that’s been around since 2008. Just because something is Canadian doesn’t makes six years of experience inapplicable. The outcome, according to The Economist? “BC now has the lowest personal income tax rate in Canada and one of the lowest corporate rates in North America, too.”

Or, according to this piece in the Globe and Mail:

The latest numbers from Statistics Canada show that B.C.’s policy has been a real environmental and economic success after six years. Far from a being a “job killer,” it is a world-leading example of how to tackle one of the greatest global challenges of our time: building an economy that will prosper in a carbon-constrained world.

Once again, if you want to be educated on the issue of the day, read the Oregonian’s reporters. If you prefer poorly reasoned arguments, read the editorial pages.

Disclaimer: these are my views alone, not of my employer.

By Evan Manvel Sept. 18, 2014