Carbon taxes cut out the middleman (and they work)

The most popular proposal for reducing greenhouse gas emissions in the United States is the "cap-and-trade" plan which would set a national limit on emissions and allow companies and individuals to buy additional credits to emit. (I cover some of the drawbacks of this in my look at carbon offsets). However, Europe has tried this scheme and found it fairly ineffective (from the WSJ Energy Roundup):

The Guardian reported last week that Europe’s cap-and-trade system is “manifestly not working as planned.” Today, the Washington Post was somewhat kinder, but still said the system had produced “a bureaucratic morass with a host of unexpected and costly side effects and a much smaller effect on carbon emissions than planned.”

The alternative plan is the carbon tax, a straightforward way to reduce carbon emissions by making them more expensive. CNN Money noted today that Europe's success on fuel efficiency - another issue Americans struggle with - is largely due to high fuel taxes, making consumers choose cars based on gasoline usage. A carbon tax would work in the same fashion, and has been endorsed by a wide range of politicians and economists who generally support so-called Pigovian taxes.

The advantage to a carbon tax is twofold: 1) it cuts out the middleman, because we don't need a trading system (with trading experts, and companies who exist just to trade carbon around) and 2) it raises revenue for a federal government that has a lot on its plate, such as the pending shortfalls in Social Security and Medicare.

Let's get taxing!