Wednesday 28 January 2009

Carbon pricing in a recession

Posner and Becker argue that raising tax on petrol in a recession is a bad idea

" A further weakening of the financial position of American carmakers would increase the size of the bailout of the American auto industry needed to prevent it from going bankrupt. This implies that higher gas taxes would have a multiplier effect on the tax burden facing American families and businesses- not only would they have to pay more for gas, but they also would at some point have to pay higher taxes to finance a larger bailout. "

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