Elon Musk Reiterates Call on Carbon Tax; Here’s What It Means

SpaceX CEO Elon Musk believes that imposing a carbon tax is the most effective way to reduce carbon dioxide emissions. Musk, who is also the CEO of Tesla, also tweeted that a carbon tax is long overdue.

"My top recommendation, honestly, would [just add] a carbon tax," Musk told Joe Rogan on The Joe Rogan Experience podcast on Thursday.

He noted that the economy "works great" and pointed out that prices and money are "just information." Musk also told Rogan in the same podcast that the economy doesn't do the right thing if the price is wrong.

There is currently no direct monetary penalty for companies and industries that emit greenhouse gases into the atmosphere; in other words, it is currently free to emit greenhouse gases, the most important and widespread of which is carbon dioxide.

When fossil fuels such as coal and gas are burned, carbon dioxide is released. NASA explained that carbon dioxide in excess in the atmosphere absorbs heat and contributes to global warming.

What Elon Musk Said About Carbon Tax

Carbon concentrations in the atmosphere and climate are an "unpriced externality," according to Musk. When an output effect is not adequately expressed in the economy, it is an externality. It is a negative externality in this situation. That would change if there were a carbon tax.

Musk said that if everyone would simply put a price on carbon emissions, the market would respond rationally. Sine carbon emissions behave poorly, Musk told Rogan in the same podcast that "we don't have a price on it."

Musk proposed a levy on consumption at the point of sale. According to the Brookings Institution, a consumption tax is imposed at the point of consumption when someone buys something. In contrast, an income tax is levied when you raise income or receive dividends, capital gains, and the like.

The SpaceX CEO also recommended that the tax be "non-regressive." Investopedia explained that this kind of tax should be imposed regardless of income level. Musk, for example, said that a "low income" customer who uses a lot of gas and therefore produces a lot of carbon emissions could be eligible for a "tax rebate."

Musk told Rogan per Fox News that he had discussed a carbon tax with the Biden administration. According to Musk, the government said it was "too politically difficult" at the time.

Elon Musk Says He Will Pay Carbon Tax, Too

On the other hand, a carbon tax might give an electric vehicle company like Tesla an advantage in the market. On the other hand, Musk claimed per Business Insider that "SpaceX will be paying a carbon tax as well." Because rockets burn fuel that emits carbon dioxide, all rocket companies will be required to pay such a tax while using jet fuel.

A carbon tax aims to balance market incentives for moving from a fossil-fuel-dependent economy to one that uses renewable energy (energy that does not produce carbon emissions). And, according to Musk, this is an "existential requirement."

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