This post has the hidden agenda of motivating Bob Frank to keep up his recent stream of green posts. Like all smart people of good character, Bob is best activated by arguing with him, though the best I can do on this one is to note that he’s implicitly accepting a known optimal level of emissions (from IPCC). But this level can only be known from the marginal benefit (of GHG reduction) and marginal cost functions, and the second is especially difficult to predict for new environmental policy. We greatly overestimated the cost of sulfur reduction from power plants, and criteria pollutant reduction from cars, back in the day when those programs were being set up. The optimal level of a carbon charge only needs the marginal benefit schedule and the current level of emissions: unless we think IPCC has some magic way of knowing this target emission level, the carbon charge will provide a better outcome with much lower information needs.
As to the gasoline tax, Bob misses two important purposes of that tax. The first, known and uncontroversial, is as an imperfect user charge for the infrastructure (mainly roads) that cars need, and gas taxes are usually earmarked for highway (and some transit) construction. A car propelled by magic completely non-polluting forces should still pay some sort of mileage charge for this.
The second purpose is not widely recognized, namely the social capital destruction occasioned by getting about in a two-ton iron suit. Cars are bad for society in ways that have nothing to do with pollution or even accidents, because they isolate us from people of different incomes, races, and ethnicities, and encourage our instinctive fear of people not like us. People in a car society can only meet each other at home, in a demographically targeted shopping mall, and at work, where “each other” is people just like you. Casual contact that would necessitate only excuse me’s on a sidewalk puts you on the shoulder exchanging papers. The system that makes cars work – low residential density in road- and parking-inflated suburbs – actively enables our reptile-brain hard-wiring to be afraid of people not like us, not to mention that it also enslaves parents as chauffeurs of kids and denies kids a properly exploratory and autonomous growing-up. The incremental damage a driver does to his society is a public bad and should come at a price.
Finally, he fails to mention that not-driving, however much a gas tax might motivate you to do it, requires complementary goods that you cannot buy individually, like appropriate land use patterns, bike paths, and transit. It’s less clear that drivers should pay for them with a driving (gas) tax, except on the general principle of raising revenue by taxing bad things.
AFTERTHOUGHT: Just back from four days in New York City, I note being struck again by how few people in this city of hardly-driving walkers are overweight. The tourists are the roly-polys on New York sidewalks.