Econometric models from the Washington State Office of Financial Management suggest that a carbon tax would have no economic impact until early next decade. Thereafter the impact on personal income would not be significant for 21 years, but the state GDP might be lower in the long run.
By John Stang, Crosscut, September 10, 2014.
Preliminary calculations show that a Washington carbon emissions tax would slow the state economic growth in the long run. But the short-term economic impact appears negligible.
Economists from the Washington Office of Financial Management presented two scenarios to a climate change advisory task force in Seattle on Tuesday. The scenarios, based on computer simulations, were not actual plans and each came with some caveats. But they provided some insights into the effects of a carbon emissions tax on the state's economy.
Simulating the impact of a lower carbon emissions tax showed Washington's Gross Domestic Production — essentially the level of government spending, investments and consumer money churning around the state in a given year — growing from roughly $400 billion today to $616 billion in 2035. Modelling the effects of a higher carbon emissions tax saw the GDP increasing from $400 billion today to $550 billion in 2035. An economic scenario with no carbon emissions tax predicted a GDP growth increase from $400 billion today to about $900 billion in 2035.
Based on the same computer simulations, neither lower nor higher carbon emissions tax levels had any economic effects on the GDP until early next decade. Neither tax rate exerted a major impact on personal incomes for the next 21 years.
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