Republicans propose…a carbon tax?

Well this complicates things. Reps. Jeff Flake (R-Ariz.) and Bob Inglis (R-S.C.) have proposed a carbon tax as an alternative to Democrats’ cap-and-trade legislation.

The legislation would tax carbon at the rate or $15/ton, rising to $100/ton over three decades.

For months, House Republicans have been blasting cap-and-trade as the equivalent of a tax on energy, a message which seems weaker now that two very conservative Republicans have proposed a direct tax themselves.

For example, consider, House Minority Leader John Boehner’s recent statement:

“Cap and trade is code for increasing taxes, killing American jobs and raising energy costs for consumers…The so-called ‘cap and trade’ proposal amounts to a carbon tax, plain and simple.”

Now Flake and Inglis have their own “plain and simple” carbon tax.

To be fair, the legislation would reduce the payroll tax to compensate for the rising price of energy, leading to a “tax neutral” bill, Flake says. (Democrats are likely to refund almost all of the revenue from cap-and-trade structure to taxpayers, mitigating the public cost of their own plan as well.)

What’s interesting here is that there has been a debate on the left over whether a carbon tax is superior to cap-and-trade. Proponents of the tax say it’s simpler, more enforceable, and easier to adjust over time. Cap-and-trade supporters respond that a carbon tax is simple in THEORY, but once lobbyists carve out endless loopholes and exceptions, it will be just as complicated as any other part of the tax code. Plus, if you implement a tax as a disincentive, you have to guess what tax level will produce the desired amount of emissions. With cap-and-trade, you simply set a ceiling.

It’s unlikely Flake’s and Inglis’s legislation will get anywhere; it’s more likely a strategy to peel off wavering Democrats from cap-and-trade, which is very tenuously advancing to a committee vote. Stay tuned to see how coal-state Democrats like Rep. Rick Boucher (D-Va.) respond to this.