How could a carbon tax replace the income tax?

joesq: How could a carbon tax replace the income tax?
If the US wanted to finance the federal government entirely thru a carbon tax (or oil tax or gasoline tax), how high a tax rate would be needed to finance the government and replace the income tax and all other revenues? How much would that add to cost of a gallon of gasoline?

Answers and Views:

Answer by bostonianinmo
As a practical matter it wouldn’t work. It would have to start at something absurd like $ 20 or more per gallon. That would force conservation measures — today’s Toyota Prius would quickly become regarded as a gas guzzler — but the resulting reduction in consumption would force the tax rate to rapidly spiral out of control. If consumption was cut by 80%, the tax would have to increase five fold to maintain the same revenue stream. Imagine a $ 2,000 fill-up at the gas station.

Forget about the immediate social impact. The urban poor might actually fare pretty well initially with public transportation readily available, but the rural poor would literally be left out in the cold as they typically depend upon older inefficient cars and trucks for basic transportation needs. The price of an airline ticket would cripple the airline industry; air travel is by far the “dirtiest” from a carbon footprint stand point. Europeans would do OK with their rail system, a comparatively clean mode of long-haul transport, but Americans would be in serious trouble. The costs of virtually all goods and services would rise dramatically due to the massive increase in transportation costs. This would cripple the economy in general and lead to wide-spread civil unrest throughout the social strata.