Smart Taxes: An Open Invitation to the Pigou Club
Assignment: In approximately 500 words, summarize the essay, Smart Taxes: An Open Invitation to the Pigou Club, by N. Gregory Mankiw. Be sure to summarize: • Mankiw’s arguments in favor of carbon or gasoline taxes, • His arguments against CAFÉ standards and cap-and-trade policies, • Why the public and politicians seem to be against carbon taxes, and • How Mankiw addresses possible concerns people would have about a carbon or gasoline tax. To Submit: Write your summary in a Word document. Save that document to your own files. Go to the “Reading Assignments Tab” for our course in Moodle. Click “Mankiw Submission” to upload your work. Grading: • A+ Shows deeper understanding. Paper will be clear, concise and correct. • A- The paper is technically correct but quotes heavily from the authors. • B+ The paper is unclear and does not show a full understanding of the reading • B- The paper is unclear and has errors in some places. • C+ The paper is unclear, has errors, is too short to fully describe the reading. • C- The paper is unclear and has errors. There is little correct analysis of the reading. • D The paper shows little effort was given to the assignment. It is wrong and unclear in many places. Tips for reading academic papers: 1. Read the first sentence of each paragraph. 2. Read the entire paper. Citation: Mankiw, N. G. (2009). Smart Taxes: An Open Invitation to Join the Pigou Club. Eastern Economic Journal
Summary of Smart Taxes: An Open Invitation to The Pigou Club
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Summary of Smart Taxes: An Open Invitation to The Pigou Club
The economics community is the only group supporting carbon and fuel taxation proposals. In Mankiw's opinion, Pigovian taxes are the least intrusive option to correct a market malfunction. Governments may utilize the revenue generated by these kinds of taxation to lower other levies imposed on society. He highlighted the case of income taxes, which produce net losses and skew incentives. Without much government activity, it is possible to safeguard an efficient resource distribution. When making decisions that result in carbon emissions, families and businesses will take in the carbon impact as an outcome of the Pigovian policy of taxing carbon emissions (Mankiw, 2009). It involves exercising caution while choosing which cars to buy or how much electricity to consume. Mankiw agreed that choosing the right amount of levy to impose was challenging. The discount rate is crucial when weighing the benefits of spending money now versus saving money