Taxing Our Way to Innovation

June 25, 2009

An interesting question in this NPR piece on taxing carbon emissions:

“When was the last time human beings modernized our energy sources by making older power sources more expensive?” he asks the interns. “And, of course, by now you probably know that the answer is never.”

Personal computers didn’t take off because there was a tax on typewriters, he says. And the Internet didn’t sprout up because the government made telegraphs more expensive.

If we’ve concluded that a product is harmful to society, imposing a tax equal to the amount of that harm is at least defendable. But taxing a product just because you think a better one should come along is just another example of politicians pretending they can be effective venture capitalists. Reminds me of the Tanganyika Ground Nut Scheme.

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