William & Mary Environmental Law and Policy Review


Stephan Sewalk


The objective of a tax on emissions is to curtail total discharges. Ever since Rio and Kyoto, this seems to be an elusive goal. Many papers have been written on the topic, but none actually solve the dilemma of how to proactively reduce emissions. This Article seeks to solve this issue by designing a better carbon tax to reduce U.S. emissions 90% by 2050. The first step needed is to extend and explain the economics of a carbon tax with reinvestment. I examine and graphically show the economics of the tax and subsequent reinvestment of revenues into building clean power plants. I consider a carbon tax applied uniformly to goods and services based on emissions intensity. This simplifies the challenge of applying the tax by creating a tax structure that is applied in a manner similar to a sales tax, but uses the value added tax (“VAT”) structure. A carbon tax is traditionally associated with cost certainty. To make the tax benefit certain, I propose to use the tax revenues to build new power generation, thereby replacing existing facilities, significantly reducing emissions. This also significantly reduces future energy costs, thereby refunding the monies paid by the people and I demonstrate this using economic graphs. However, while realizing that this is the best policy proposed to date, it does not solve emissions from transportation. Therefore, I take the next step and propose that the tax policy needs to include a directive to convert fossil fuel transportation to fuel cell, battery and electric vehicles. Doing so results in U.S. emissions declining 90% by 2050.