republicanconference / Flickr

Arthur Laffer says exchanging a carbon tax for the federal income tax is smart economic policy

If there is a patron saint of modern Republican tax policy, it is economist Arthur Laffer.  Laffer is best known for the  Laffer Curve – a graph of the theory that under the right circumstances, a cut in tax rates produces higher tax revenues.  The Laffer Curve was the keystone of  so-called “Reaganomics.”

He was in Manchester recently to present a very different idea – one that so far Republicans have been slow to embrace.

Arthur Laffer sees all taxes as essentially bad but some are worse than others.  With that in mind, he would like to swap a tax on carbon for our current tax on income.

“What you do by having an income tax rate reduction across the board, you really provide great incentives for people to work, produce, and increase output,” Laffer said.

“So I would support a carbon tax in replacement for a progressive income tax.  I think that would be very good for the economy and as an adjunct, it would reduce also carbon emissions into the environment.  It would have that effect as well.”

Needless to say, we found this stance more than a little surprising.  NHPR’s Jon Greenberg recently spoke in-depth with Laffer about his unorthodox position on carbon taxation. Continue Reading →