Greg Mankiw gives us the fundamental theorem of carbon taxation:
Cap-and-trade = Carbon tax + Corporate welfare.
Got that? It's a tax increase, with some bad subsidies attached. Awesome!
And this is the preferred policy for combating global warming, mainly because no one wants to be seen as a tax-raiser (as with a straight carbon tax).Ã‚Â All together now, let's get a chorus going as we sing, "Market based! Market baaaaaased..."