Greg Mankiw published an excellent and fairly easy to understand post on his blog today on why carbon allowances should be auctioned and not given away and why the proceeds from the auction should be used to offset income taxes.
Mankiw says, "But that requires a cut in income or payroll taxes to be a key part of the environmental policy."
Of course we can expect the Democratic and liberal economist chorus to disagree with Mankiw mainly because he is conservative and the policy he advocates is not what Obama is proposing. Mankiw's analysis and conclusion are correct, but that will have little effect on stopping those voices that are opposed to anything recommended by conservative economists.
Read his complete blog post, "Wonky Talk about Carbon Taxes" here.
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