Carbon Tax vs Cap and Trade

A carbon tax results in a known cost to the economy, but an unknown reduction in pollution. By contrast, a cap and trade system results in a known reduction pollution, but an unknown cost to the economy.


When politicians are talking about the high cost of gas, I can't see further taxes on carbon being politically acceptable. I think a cap-and-trade sold to the public as being a tax on those evil businesses being more likely.

The problem is that a cap and trade system will result in faster and more severe changes. This will have higher social costs.

For the record, either can be preferable to the hodge-podge systems that have been considered. Congress can't efficiently regulate each industry to thus-and-such amount of this-and-that type of pollution. That way lies madness.