No, the carbon tax does not work

Stephen Gordon trying to justify the carbon tax with indifference curves.


Government gets taxed on its use of fossil fuels, a necessity. The money is returned as a flat sum to citizens. But government will simply add another tax to cover the loss.

Plus, this also means that government has to remove the automatic inflation adjusters, otherwise iwe spiral as government expenses rise with each increase in the carbon tax. The program misses that critical point, government is mostly about subsidizing resource use.  The impact of government spending makes all those indifference curves become low correlation scatter plots, it removes the incentives from carbon reduction to getting a government inflation adjusted incomes.

Government has no indifference curves,  carbon reduction only works when carbon users trade with carbon non-users via tort where the damages can be established, and where government has no special exemption.

There is no economic trick proposed that makes government obey smooth indifference curves, and that is the complaint, the complaint is absolutely true, this has been tried, government adjusts to continue inefficient carbon use, government leaks.

The thing about the tort judge, the tort judge only collects fees for court expenses. Hence the tor is mostly out of the loop, and government CO2 usage stands alone with private sector CO2 use. Drawing indifference curves in the situation is useless, explains nothing.