|| Print ||
|Tuesday, April 02, 2013|
BY DR. THOMAS POTIOWSKY, DR. JENNY LIU, AND JEFF RENRO | OP-ED CONTRIBUTORS
Our lives are surrounded by regulations to influence behavior, from not smoking in public places to not polluting waterways and being civil in public. Usually, a violation of these regulations is associated with a fine or a tax to discourage greater use, as in the cigarette tax.
The fines and taxes serve two purposes: 1) to discourage an unwanted behavior and 2) to generate revenue that funds the operation of public services, such as police and fire departments.
In a very broad sense, our society fines and taxes undesirable behavior and uses the funds to promote behavior we do want, such as safety on our streets and fire prevention for our homes.
When it comes to climate change, we also have a number of regulations to stop or discourage behavior that may lead to global warming. Violations of these regulations have fines associated with them. However, unlike the cigarette tax, there is no price or cost placed on emitting carbon. Furthermore, we are missing the second part of using the funds to promote behavior we do want.
A properly designed carbon tax can get us there.
In March 2013, we released our report Carbon Tax and Shift: How to Make it Work for Oregon’s Economy which models one way of reducing carbon emissions while also assisting businesses and households by reducing distortionary income taxes and potentially generating revenue for the state.
In 2008, British Columbia instituted a revenue-neutral carbon tax of $10/ton CO2e which has risen to its current cap of $30/ton CO2e. Results of the tax are still preliminary, but evidence suggests that BC has reduced emissions more than the rest of Canada while enjoying slightly higher GDP growth than the other provinces.
The revenue has been repatriated back into the economy primarily through cuts to corporate and personal income tax rates. As a result, BC now has the lowest corporate income tax rate in the OECD. In our review of carbon pricing schemes, BC stood out for the ease with which its program was implemented as well as the environmental benefits without negatively impacted the larger economy.
We estimated the net economic and environmental impacts of bringing this system to Oregon. While our research is preliminary, we find that there is a way to decrease CO2e emissions in Oregon while having a small, positive effect on Oregon employment. Our study models several different carbon prices, but we decided to use a price of $60/ton CO2e in our full scenario estimates.
When deciding how to repatriate carbon tax revenues, there is a tradeoff between equity and efficiency. A successful program will need to distribute the burden of the tax fairly, while also preventing adverse economic effects. During our simulations, we found that corporate income tax cuts are key for economic efficiency. If all of the revenue is devoted to corporate income tax cuts, the Oregon economy has the largest employment growth but fails to produce equitable outcomes. Because low-income households spend more of their income on energy, measures must be put in place to reduce the regressiveness of the tax.
Exempting low-income households would severely weaken the carbon price signal; instead, we suggest returning funds to low-income households either quarterly or annually through a greater decrease in the income tax rate, tax credits or subsidies. In addition to being ethically justified, giving extra relief to low-income households also leads to greater economic growth.
After running dozens of scenarios, we arrive at two preferred repatriation schemes. Both devote a majority of revenues to corporate income tax cuts, and include low-income household relief to ensure equitable outcomes. They differ in the amount of revenue set aside for targeted reinvestment. In one scenario, 10% of revenues are set aside for industrial energy efficiency projects. In the other 25% of revenues are used for industrial and residential energy efficiency, as well as transportation infrastructure. The outcomes differ in the amount of jobs created, as well as the distribution of the tax burden. In all of our scenarios, we find net changes in employment that corresponds to a fraction of 1% of Oregon employment.
We still have work left to do before a carbon tax could be implemented. Impacts on industry sectors and households need to be estimated in finer detail. A method for applying carbon pricing to imported electricity that is both economically valid and legally viable needs to be devised.
Between the experience in BC and the results of our research, we can avoid the trade-off between doing what is right for the environment and what is right for the economy. It would be ideal if carbon pricing was adopted on a national or regional level, but it could be adopted locally.
There will be winners and losers in any scenario, but with carefully-designed repatriation methods we can reduce what we do not want — carbon emissions — while promoting want we do want – a healthy economy and job creation.
Thomas Potiowsky, Jenny Liu, and Jeff Renfro are researchers at Portland State University's Northwest Economic Research Center.
Monday, July 13, 2015
BY KIM MOORE
A conversation with Greg Lambert, president of Mid Oregon Personnel Services.
Friday, July 10, 2015
BY JACOB PALMER
Most of the food Americans consume is trucked in from hundreds of miles away. Eric Wilson, co-founder and CEO of Gro-volution, wants to change that. So this past spring, the Air Force veteran and former greenhouse manager started work on an alternative farming system he claims is more efficient than conventional agriculture, and also shortens the distance between the consumer and the farm.
Monday, July 13, 2015
BY SAM BLACKMAN
Storyteller-in-chief with the CEO and co-founder of Elemental Technologies.
Wednesday, July 15, 2015
Oregon's roads are crumbling, and revenues from state and local gas taxes are not sufficient to pay for improvements. We asked readers if the private sector should help fund transportation maintenance and repairs. Research partner CFM Strategic Communications conducted the poll of 366 readers in February.
Monday, August 03, 2015
BY JASON E. KAPLAN | STAFF PHOTOGRAPHER
You may have noticed the photos of our rural health innovators departed from the typical Oregon Business aesthetic.
Tuesday, July 28, 2015
BY JASON NORRIS
Uncertainty in Greece and China, along with potential interest rate hikes mean investors are looking at the market and nervously questioning where they should be invested.
Monday, July 13, 2015
BY KIM MOORE
Revenues in Oregon's private, for profit sector maintained solid growth as the economy continued to rebound.
|Child care challenge|
|Is there life beyond Reed?|
|Back to School|
|Ninkasi grows to NY|
|Eco challenges facing Oregon|
|Adidas produces special shoe for upcoming Timbers/Sounders match|
|Intel invests $60M in drone company|
|Congestion should be expected|
|How many devices are using Windows 10?|
|Aftermath of the Ashley Madison hack|
Transforming the culture of Oregon’s educational leadership.
The Board dismissed a petition related to efforts to unionize the Northwestern University football team.
Every once in a while we receive a letter in the (fictional) mailbag that is tough to describe and quite compelling. This week, Isabel, the new HR manager at LabCo (and someone who is new to HR), wants to know whether she may fire the owner’s son for having an Oregon medical marijuana card. In passing, Isabel also makes a number of alarming admissions about her motivation. Here is Isabel’s nerve-racking question and our response to it.
Oregon Sick Leave is here, and changes to the federal white-collar worker regulations are on the way. This workshop will prepare you for both. We invite you to participate in an interactive discussion on how to start planning now for the future impact on your operations and finances.
Presented by OEN + CENTRL + YESpdx.
This Roundtable will cover numerous issues under the employer "shared responsibility" rules of the Affordable Care Act, including how to track the "full-time" status of variable-hour employees, temporary or seasonal employees, and employees who experience a change in status or a break in service. Additionally, we will provide a brief overview of Code sections 6055 and 6056, which require most mid-sized and large employers to submit their first information reports to the IRS in early 2016 regarding the health insurance coverage being offered to employees. We invite you to participate in an interactive discussion on how to prepare for the future impact of the shared responsibility rules on your operations and finances.