Why Cap-and-Trade Is not a Hidden Tax

Is Cap-and-Trade Really Just Another Tax?

George Will has said that the cap-and-trade program proposed by the Obama administration to incentivize the reduction of greenhouse gas emissions is really a hidden tax.

Not so, says Bren School professor of economics Charles Kolstad in an article he wrote for the spring issue of the Harvard College Economics Review.

In what is a useful primer on a policy option destined to be kicked around the political and media airwaves in coming months and years, Kolstad distinguishes the difference between a tax, the purpose of which is to raise revenue, and a potentially revenue-neutral cap-and-trade program, which is intended to put a price on polluting emissions, thereby incentivizing polluters to "clean up their act."  Read the article.