The Economic Outcomes of a Carbon Tax

By March 13, 2013Economy

Late this afternoon a group of House Republicans lead by Congressman Scalise (R-LA) held a press conference to announce a resolution opposing a carbon tax. Late last month the NAM released the results of a study by nonpartisan NERA Economic Consulting which found a carbon tax would have a negative effect on jobs, energy costs and manufacturing output.

Today, the NAM sent a letter to Congressman Scalise outlining the findings of the study. Below is an excerpt from the letter:

“NERA concluded that the increased costs of coal, natural gas and petroleum products due to a carbon tax would ripple through the economy, resulting in higher production costs, less spending on non-energy goods, fewer jobs and slower economic growth. Nationally, a carbon tax designed to reduce CO2 levels by 80 percent could place tens of millions of jobs at risk and raise gasoline prices by over $10 a gallon, natural gas prices by almost $60 per MMBtu, and residential electricity prices by over 40 percent. NERA also found that a carbon tax would have a negative impact on manufacturing output. In energy-intensive sectors manufacturing output could drop by as much as 15.0 percent and in non-energy-intensive sectors by as much as 7.7 percent. The overall impact on jobs would be substantial, with a loss of worker income equivalent to between 1.3 million and 1.5 million jobs in 2013 and between 3.8 million and 21 million by 2053.”

Yesterday, a bicameral group of Democrats released a discussion draft of a carbon tax plan. The NAM’s Ross Eisenberg posted here on yesterday regarding their efforts.

The bottom line is a carbon tax resembling the one in our study would drive up energy prices and make it more expensive to manufacture in the United States.


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