The beauty of a carbon tax – and its exemption for the poor
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According to data from the Energy Information Administration, dwellings of 500 square feet or smaller used fewer than 5,000 kilowatt hours of electricity per year, or less than half that consumed by most big houses. If each household were given a 5,000 kWh yearly tax exemption, households who live in apartments, small houses, and mobile homes would typically pay little for their electricity. But households with bigger carbon “footprints,” who are mostly middle-class or affluent people, would pay much more.
In addition to helping the poor, a simple exemption would encourage energy conservation in an important but overlooked area – the mushrooming size of American houses.
While the number of people in a typical household has shrunk in recent decades (more than half of all households now consist of just one or two persons), house sizes have ballooned – the average new house in the 2000s was more than 2,400 square feet, compared to less than 1,800 square feet in the 1970s. Cheap electricity has been one reason.
A carbon tax with an exemption, by contrast, would spur a reversal of this trend. Americans who love big houses and consuming electricity would be free to act on their desires – only they would have to pay to do so. The solution would be both efficient and highly American.