As Congress debates how to pay for Biden’s infrastructure plan, it is again neglecting the most logical of policy choices. Biden’s infrastructure ambition seeks to make much needed investments into American roads, green energy, bridges, and broadband. Such investments are long overdue and will help keep the country competitive into the 21st Century. But funding them is dividing an ideologically tunnel-visioned Washington.
Biden and the GOP managed to box themselves in early on during negotiations regarding funding. Biden has demanded that his bill cannot raise the national debt, he refuses to raise taxes on families making less than $400k a year, or to impose so-called user fees, such as tolls. The GOP, on the other hand, will not support any bills that undo their signature 2017 tax law that reduced taxes on businesses.
Only two funding options proposed thus far meet these narrow requirements. The first is Biden’s suggestion of beefing up the IRS so that it may crack down on tax evasion by high-earners. This would raise revenue, theoretically, while not technically increasing taxes on anyone.
The other, suggested by the GOP, is to re-purpose unused money from Biden’s $1.9 Trillion stimulus. Though this idea is unpopular with the Democrats, the logic seems sound. However, even together, it isn’t clear that these funding pathways will raise enough funds to pay for the infrastructure program desired. It certainly isn’t large enough to tackle climate change, another dealbreaker for progressive Democrats.
To bridge the funding gap, some Senators are playing an Orwellian game of word twister to re-write the English language as we know it. Mitt Romney has proposed that future gas taxes be indexed to inflation as one means of finding more money. Gas taxes will rise, but, according to Romney, because they rise along with the prices of everything else, this is most certainly not a tax “increase.” Obviously, this statement defies all logic.
That is not to say that raising gas taxes is inherently a bad idea, but let’s not pretend that a gradual tax increase…isn’t a tax increase. It is. On the contrary, an open-ended stealth gas tax increase might more pernicious.
The question becomes then, how does one find hundreds of billions of dollars without borrowing it, raising taxes on regular people, or altering the 2017 tax law on businesses?
This is the Way
The answer to this conundrum is: carbon taxes on big businesses. A tax on carbon emissions would serve the interests of both parties in remarkable ways.
A carbon tax could raise revenue to fill in the funding gap for a large infrastructure investment package that would create untold jobs and opportunity. Further, to avoid the tax, companies would have to find innovative ways of reducing their carbon footprint, thus discouraging the emission of carbon dioxide into the atmosphere and encouraging investment into clean energy.
A carbon tax, therefore, also doubles as a measure against climate change, and should satisfy progressive Democrats whose votes hinge on climate concerns. It does this while circumventing the heavy-handed environmental regulation and spending that the GOP abhors.
A carbon tax would also not violate the red lines of either party. It does not require rolling back the GOP’s 2017 signature tax law, it does not raise taxes on individuals, and it is certainly isn’t a user fee.
The Middle Way
While it is unquestionable that a carbon tax is sound economic and environmental policy, the radical elements of Washington won’t even discuss it. For far-right Republicans who view the world in dichotomous terms, any tax is a mark of the beast. Meanwhile, the American left has somehow managed to string their racial justice, inequity, and climate change agendas together in such ways that a carbon tax appears powerless and meek.
The solutions are here in plain sight. Washington just can’t see it, or perhaps doesn’t want to.
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