Watching insiders – listening to Dr. Emmerson claim that opposing a carbon tax is like favouring tax hikes, as by ‘yanking out the carbon price, you are yanking out the tax cuts’.
Dr E doesn’t belive what he’s saying – no economist/ one could.
His argument cannot be true: the upper bound on the value of tax relief is the the revenue raised by the CPRS, LESS the cost of the mechanisms of government required to 1/ collect the carbon tax and 2/ distribute the tax cuts.
Tax – transfer systems generally make everyone poorer: due to
1/ the direct costs tax and transfer systems (wages and capital costs)
2/ the deadweight losses associated with taxation
In general, we spill a little of the economic milk each time we pour from cup-to-cup. That’s why we cannot tax ourselves rich.