Achilles1212

Emissions Fees vs. Cap and Trade

Go ahead, but this is just support for a tax versus emissions trading, so you must balance it per WP:NPOV. If a tax was able to have the same effect as emissions trading, than you would likely not see Congress scrambling for the more complicated cap and trade program as much as Congress likes to complicate everything). Even given uncertainty, for a tax to have the same effect as a cap and trade program, it would have to be a variable tax rate. This is because cap and trade (if executed properly) produces absolute limits on emissions, while other economic factors our dynamic. For example, lets say economic confidence deteriorates further, this would require a lower emissions tax rate to produce the same effect, while in emissions trading the cost of credits goes down thus producing the same effect. The first case is obviously impractical; the government would have to act like the market, adjusting the tax rate constantly. In the second case, the market acts as the market, adjusting the price of emissions constantly.--Jorfer (talk) 14:33, 2 July 2009 (UTC)

But now you are arguing which one is the better system when before you were arguing that they are "equivalent" in practice, which they are not. In saying that a tax would be better in practice, you are also assuming that a tax based on changing marginal cost would be easy to implement. This is not true. If the marginal cost was flat, it would of course be easy to implement, but this is rarely the case in economics and is also not the case here. In fact, any emissions below the ability of the earth to deal with them (oceans, forests, etc.) has 0 marginal cost, but once emissions passes that threshold, the marginal cost increases exponentially the same way as the value of damage between a category 3 hurricane and a category 2 being exponentially larger than a category 2 and a category 1 hurricane. Congress of course could try to come up with a formula for just change for the marginal rate, but even if they could come up with a good enough model, they would have to change the tax based on a lagging indicator, emission statistics, as unlike in the real economy where industries face the marginal cost of their goods before they produce them, the tax rate would not be changed until after all players produce their goods. In contrast, by eliminating the uncertainty of quantity supplied (if executed properly), emissions trading allows business to know the marginal cost of emissions before producing the good. A changing marginal tax rate for emissions would be great in theory, but in practice the deadweight loss would likely be greater than Congress setting the quantity supplied at a place close to where the marginal benefit will equal the marginal supply.--Jorfer (talk) 21:30, 2 July 2009 (UTC)

The key word being at any moment in time. That makes it a theoretical statement as we can't freeze time. As long as you make clear that it is equivalent theoretically and give proper sourcing per WP:V, I see no problem with such a statement being included. I did misread your statement; you said nothing subjective. You are right when you say "You imply that we need to cap at a certain value for all of time." I should have been more clear. I meant without non-market driven changes in the system when I said "if executed properly" (i.e. European Union arbitrarily increasing the number of credits in the system). I was being unfair, however; I was comparing an ideal based tax system to a practical cap-and-trade system. Given that you just admitted the point I was getting at: in practice, they are not equivalent, "In a cap-and-trade system, the tax value changes all the time. In a tax system, the cap changes all the time"--Jorfer (talk) 22:50, 2 July 2009 (UTC)