Now no, I’m not usually in favor of new taxes, preferring rather to think up ways of abolishing some of those we already have. However, Ross McKitrick has come up with a plan that I fully support :
Now put those two ideas together. Suppose each country implements something called the T3 tax, whose U.S. dollar rate is set equal to 20 times the three-year moving average of the RSS and UAH estimates of the mean tropical tropospheric temperature anomaly, assessed per tonne of carbon dioxide, updated annually. Based on current data, the tax would be US$4.70 per ton, which is about the median mainstream carbon-dioxide-damage estimate from a major survey published in 2005 by economist Richard Tol. The tax would be implemented on all domestic carbon-dioxide emissions, all the revenues would be recycled into domestic income tax cuts to maintain fiscal neutrality, and there would be no cap on total emissions.
Once you get past the technical matters his proposal is really quite simple. Impose a carbon tax, one that’s revenue neutral, but tie it to the actual amount of warming observed: the higher temperatures rise, the higher the tax. If temperatures don’t rise then nor does the tax.
This should of course please everybody. Those who believe that temperatures will rise get the higher taxes they desire: those who don’t can simply wait to say I told you so.
Of course, the true delight of this proposal is that it not only won’t please everyone, it will enrage just about everyone. I for one look forward to the great spectator sport of watching those who want the higher taxation explaining why this form of accountable higher taxation won’t work.