Why should we assume that a carbon tax will be simple and transparent?
I keep hearing that a carbon tax is obviously superior to a cap-and-trade system because it is “simpler and more transparent.”
This has always struck me as a classic case of petitio principii — Latin for starting your argument on third base and boasting about your batting skills.
Would a carbon tax proposed and implemented by the U.S. federal government be simple and transparent? Perhaps, but at the very least that claim requires an argument. (Carbon taxers could start by pointing to an existing section of the U.S. tax code — preferably related to a huge tax that affects virtually every economic actor in the country — that exhibits those virtues.)
I can pretty easily argue the superiority of cap-and-trade if you allow me to begin by stipulating that the system will be perfectly designed and implemented. That’s rightly seen as a foul play for cap-and-traders (look at Europe! look at Europe!) but it’s no more legitimate when arguing for a carbon tax.