$400 a tonne CO2 tax ($4 on a gallon of gas) is enough to modify behavior and encourage real CCS. This could be rebated to consumers (everybody gets a $6500 check a year) to make it revenue neutral. Two problems:
(1) A legitimacy gap. People think taxation is on ratchet and wouldn't trust it to be revenue neutral and not a money grab.
(2) It's a global problem. If there is a carbon tax in the US and no carbon tax in China that's unfair for our manufacturers. People will complain about the fairness of any particular rebating scheme inside the US, but there will always be much worse complaints about a system which embraces all nations from Luxembourg to Burundi.
For #2, most proposals I’ve seen aim to put domestic products on a level playing field with products from countries without an equivalent tax with a “border adjustment”, a sort of tariff that’s based on the carbon intensity of the product (with a pessimistic estimate if they don’t know). This has the side effect of encouraging other countries to adopt similar carbon taxes.
The EU is implementing something like that, and we’re seeing an uptick in appetite in the US to implement a border adjustment here, partly as a result, there were a few bills put forward in the last Congress, though nothing has gotten very far yet.
you forgot (3) an efficiency gap. No government or quasi-governmental organization can deliver this program without massive leakage. Look at Canada: carbon taxes go into general revenues, and some portion of it gets paid out of general revenues. It also doesn't matter if the payment is a redistribution or an ad buy for a terrible commercial on the CBC - it's all fighting climate change!
You'd wish instead of "seeing like a state" organizations would learn to "see like a consumer" and be able to recognize that a terrible commercial is a terrible commercial!
I think the efficiency gap is less than with other approaches. Rather than privileging electric cars we should reward people the same if they save carbon by buying an electric car or riding a bike or if an industrial process is replaced by one that is naturally carbon free or if you take the carbon out of the stack or if you take it out of the atmosphere. The market should decide what is the most efficient.
(Note another 'efficiency' concern people have is that you don't want to pay people $400/ton to store carbon from fermentation at an ethanol plant that is unusually cheap at $40/ton because you get nitrogen-free CO2. People seem to have a moral problem with that, first fundamentally, second because the ethanol plant is problematic in other ways)
It's better if the tax revenue goes back into fighting climate change but the point of a carbon tax is to punish bad behavior. Just by implementing the tax you're fighting the problem (in a small way).
Besides the tariff on imported products the sibling talks about, you can also rebate the tax paid on exported products.
It's not simple to manage those adjustments, but governments deal with much more complex taxes everywhere. It's not a big deal.
And yeah, the UBI cancellation of the tax, the tariffs on imported products and the rebate on exported products deal with every single problem I've seen people post about a carbon tax, except for "expensive gasoline will destroy our economy!", that is almost always pushed by people that live in a place with some of the cheapest gasoline prices of the world.
There is an add-on that some people push where you don't cancel all of the tax in an UBI, but use a part of it to finance carbon capture projects. I do really like this one, but it's not something that is required for things to work.
(1) A legitimacy gap. People think taxation is on ratchet and wouldn't trust it to be revenue neutral and not a money grab.
(2) It's a global problem. If there is a carbon tax in the US and no carbon tax in China that's unfair for our manufacturers. People will complain about the fairness of any particular rebating scheme inside the US, but there will always be much worse complaints about a system which embraces all nations from Luxembourg to Burundi.