Achieving Environmental Sustainability through Fiscal Policy
Critical Issues in Environmental Taxation series
Edited by Larry Kreiser, Julsuchada Sirisom, Hope Ashiabor and Janet E. Milne
Chapter 3: Comparisons between the Cap and Trade System and Carbon Taxation: Is the USA Ready for a Carbon Tax?
Paul J. Lee, Rahmat O. Tavallali, Hai Sook Kwon and John T. Geekie INTRODUCTION The current global environmental crisis and the downturn in the US economy are two very large issues which weigh heavily on the minds of Americans. In particular, carbon emissions and the dangerous burden that global warming poses for the future are problems which must be addressed as quickly as possible. The cap and trade model was featured in US President Barack Obama’s first budget as a way to tackle the environmental devastation the world faces. However, the severe problems with the economy, protests from critics, and the complex nature of implementing such a system prevented it from being established in a timely manner (Broder, 2009). For some time, Congress was re-evaluating the possibility of employing some form of the cap and trade system (The New York Times, March 2010). However, there is a need to examine whether or not that particular model is effective enough to be implemented on its own, or whether it should be preceded by or combined with another method. This paper will discuss the option of using a taxation method to precede the cap and trade system, which could takeover in the long term, in an effort to take immediate action which will reduce carbon emissions. Carbon taxation could be an effective method in pushing companies towards reduction of carbon usage, which would result in reform on a broader scale. It can even be immediately applied to the individual consumer. Ideally, carbon...
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