Two liberal senators are making another attempt to place a tax on carbon emissions, launching a measure that could generate up to $1.2 trillion in revenue over 10 years.
It’s what economists call a Pigovian tax—essentially imposing a cost on something that creates social problems. The idea developed by economist Arthur Pigou is currently applied to cigarettes, but moving it into pollution would be too much for most in Congress to support regardless of the theory behind it.
The bill which was filed on the heels of the president’s calls to battle climate change at his State of the Union address last week, was sponsored by Sens. Bernie Sanders, I-VT and Barbara Boxer, D-CA, and would set a $20 tax per ton of carbon dioxide emitted and would rise 5.6 percent over a period of ten years. The measure aims to slash heat-trapping greenhouse gas emissions by 80 percent by 2020.
Unlike the handful of unsuccessful carbon tax proposals, this bill returns 60 percent of the collected revenues to consumers. Again, carbon taxes are a tough sell in Washington, so movement on this bill is highly unlikely-especially in the Republican-dominated House and Democrats in the Senate with re-election concerns. But if you want to talk about deep tax reform and benefits to the public, even Mitt Romney’s economic advisers bought into this idea. - Read more at Reuters
IDENTITY THEFT COSTS ECONOMY $21 BILLION The growing problem of criminals filing phony tax forms with stolen names and Social Security numbers will cost the nation $21 billion over the next five years, the U.S. Treasury estimates. Though that is just a drop in the ocean compared to the $1.1 trillion collected from taxpayers last year, Treasury officials warn that identity theft has been growing substantially in the last three years, and has become very difficult for the government to collect the money before the IRS can discover fraud. - Read more at CNBC
BAD NEWS FOR FUTURE RETIREES More than half of American workers ages 30 and older are on a path that will leave them unprepared for retirement, according to the Center for Retirement Research. The nation is facing a growing retirement savings deficit of $6.6 trillion. - Read more at The Fiscal Times
RYAN: SEQUESTER WILL HAPPEN THANKS TO DEMS House Budget Committee Chairman and former Republican Vice Presidential candidate Paul Ryan said he expects the sequester to happen and blamed Democrats for showing “no leadership” to avoid the massive cuts, during an interview Sunday with ABC’s This Week.
Ryan also dismissed the Senate Democrats plan to replace the sequester with a combination of spending cuts and tax revenue that would delay the blunt cuts for 10 months. “I’d be curious to see if they could actually pass that, number one. Number two, the president got his tax increases last year. He got those higher revenues,” Ryan said. “But taking tax loopholes, what we’ve always advocated is necessary for tax reform, means you’re going to close loopholes to fuel more spending, not to reform the tax code.”
In other words, anyone who prizes his comprehension of numbers as much as Ryan does should know the failure rests as much with the failure of incentives, as it does leadership. With Congress on recess this week, here’s what is really at work. Both sides sees the alternative to the sequester as worse than the sequester itself. Republicans dread any tax increases, while Democrats feel the same way about further cuts into domestic programs and discretionary spending. - Read more at Business Insider
DEFENSE INDUSTRY RETHINKS SEQUESER STRATEGY Defense contractors are turning their attention to the expiration of the continuing resolution on March 27, which many see as their best bet to a quick fix shortly after the sequestration cuts take effect. “The fight’s not over. When sequestration goes into effect on March 1, we don’t shrivel up and die — we just get louder,” said Dan Stohr, spokesman for Aerospace Industries Association. - Read more at The Hill
RUBIO CASHES IN ON WATER BOTTLE MOVE The thirsty Florida senator is laughing all the way to the bank after a frantic gulp of Poland Spring turned his State of the Union rebuttal into a joke. His PAC has raised more than $100,000 for his Reclaim America political action committee by selling branded water bottles, Buzzfeed reports. - Check out the water bottles here