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Manufacturers: Carbon tax drops output 15 percent

By , - Last modified: March 1, 2013 at 9:23 AM

The National Association of Manufacturers has put out a study of carbon tax proposals that estimates there would be a net negative effect on the economy, including as much as a 15 percent drop in output among energy-intensive manufacturing sectors.

The study looks at two proposals to tax high emissions of carbon dioxide and other greenhouse gases at the producer level of fossil fuels such as coal, natural gas and petroleum products, and was spurred by some insistence that the taxes could reduce national debt and deficit, the association said.

In the case of taxing $20 per ton, gross domestic product (GDP) would drop by 0.5 percent, or $97 billion, in 2023, according to the association. That would equate to $340 less of average consumption per household.

Under a proposal that would cut emissions 80 percent by 2053 with a faster increasing tax, the GDP change would still be -0.5 percent in 2023, but average household consumption would drop $690, according to the association.

The association study also points out that labor income would drop 1.1 percent in 2023 from 2012 baselines under the per-ton case and drop 1.3 percent under the percent-reduction case. Between 2.3 million and 2.8 million jobs would be lost, according to the study.

Increased prices for energy due to the tax would cause manufacturers to scale back operations, put off expansion, hire less people and ultimately would hurt their production, the association said.

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