Tax Analysts Blog

Green Subsidies Kill Job Creation

Posted on Dec 26, 2009

A thoughtful letter in this morning's Washington Post warns citizens to be on guard against politicians selling "green" snake oil. Tax subsidies for energy efficiency are economically inefficient.

The alternative approach is a tax on energy--take your pick: gas tax, BTU tax, carbon tax, or cap-and-trade. This approach achieves environmental goals with the least damage to the economy. Revenues from the new tax (or selling of emission permits) should be rebated back to the general public--not large energy producers.

Republicans are absolutely correct that cap-and-trade legislation is a job killer. The green jobs created will be more than offset by lost non-green jobs. BUT this does not mean such a proposal should not be enacted. Instead of arguing their case based on environmental benefits, cap-and-trade supporters argue their proposal is about creating jobs. This is good politics. Unfortunately it is not true. Environmental improvement will require some pain. Citizens must be ready to absorb some of the economic costs--not deny they exist.

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