For ease of use and immunity from political meddling, the carbon tax is the clear winner. Taxes can be applied early in the fuel distribution process, which makes the logistical task much easier. That sort of upstream application would make attempts at political interference much more transparent, as well. So what about uncertainty? The big critique of a carbon tax is that it cannot guarantee a country will come in under a pre-set emissions cap. If the desire to pollute is really, really high one year, we could find that a given tax won't serve as a sufficient deterrent, and we'll blow past our limits.
When Mr. Waxman first unveiled his plan in late March, at least a dozen of the panel’s 36 Democrats had qualms of it. These so-called Brown Dogs were mainly from states dependent on coal for power and manufacturing for jobs, and needed assurance that their constituents would be protected.
In weeks of closed-door negotiations with these Democrats, Mr. Waxman doled out billions of dollars worth of free pollution permits, known as allowances, to cushion any price shock caused by imposing a cap on emissions of heat-trapping gases.