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If Tax is a four letter word then perhaps a shift in thinking is needed…

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There is a good interview here with Gregory Mankiw, an economist and former chairman of President Bush’s Council of Economic Advisors. What I like about this short interview is the focus on tax shifting and revenue recycling — they are presented as integral to carbon tax design. This definition of a carbon tax also explicitly differentiates the income effect from the price signal on carbon. This quote says it all:

“There’s no question that, politically, tax is a four-letter word. But we have to really convince voters that this is not an overall tax increase; it’s really a tax shift,”

So, when we speak of a carbon tax we are really speaking of a “carbon tax shift”. Bundling this notion of a tax shift with carbon tax seems to be an important and fundamental first step in marketing a carbon tax shift to politicians and their constituents.

Written by Dave Sawyer

December 23rd, 2007 at 2:38 pm