*The plan spills over to other areas of agreement which solves a host of existential risks like terrorism, pandemics, and cybersecurity

A carbon tax can drive the deployment of technologies and innovation necessary to cut greenhouse gas emissions and combat climate change. And by getting the biggest environmental bang for our buck, a carbon tax makes the politics and economics of driving down emissions easier. By creating a strong profit incentive for businesses to seek out and exploit low-cost ways of cutting emissions, a carbon tax can be quite effective environmentally. As a transparent, administratively simple approach, a carbon tax represents good public policy, particularly within a highly partisan and politically divided democracy. As mentioned, a carbon tax would also act as a substitute for the rigid and complicated framework of command and control regulations that define the status quo. The absence of a single comprehensive, national climate policy has produced a vacuum, which has been filled by a patchwork of state policies, applications of decades-old statutes to specific sectors and emission sources, and technology-specific subsidies. This complicated suite of policies is not the path to a low-carbon economy; it is a collection of stopgap measures desperately awaiting more comprehensive, durable policy instruments that will truly get us there. We could say that the rationale for coupling a carbon tax and tax reform is, therefore, twofold. First, climate policy and tax reform benefit from each other in terms of economics. Tax reform would lower the costs to the economy—and potentially eliminates the net costs—of a carbon tax, while the carbon tax provides the revenues to finance the tax reform. Second, such an approach can broaden the political coalition that would derive a “win” from at least some element of the policy package. In isolation, a carbon tax may not necessarily appear politically appealing. But it may be preferable to a national sales tax, the elimination of the home mortgage interest deduction, or adding trillions of dollars to the national debt as a part of a tax reform (aimed at reducing income and corporate taxes). Building a broad political coalition would ensure the durability of the carbon tax and tax reform. Implementing a U.S. carbon tax would also highlight American leadership on a globally important issue, while reversing existing climate change policies without a credible alternative raises questions about the U.S. commitment to the Paris Agreement (or simply to any international agreement). The key elements of the Paris Agreement represent long-standing U.S. interests: a respect for sovereignty, by allowing each country to combat climate change as it so chooses, while maintaining a focus on transparency in implementation to assess whether all major partners undertake comparable efforts. Even if global climate policy is not a first-tier priority of the new Administration, the fact that it is a top priority for many countries around the world provides a potential leverage point for the United States in other bilateral or multilateral negotiating contexts. Since the climate agreement is part of a complex web of international relations, U.S. engagement in it can facilitate efforts to secure deals on the incoming Administration’s foreign policy priorities. Walking away from the Paris Agreement, on the other hand, would make it much more difficult for the incoming Administration to work with other countries on issues ranging from terrorism, to trade, to cybersecurity, to public health and pandemics, as well as an array of other bilateral issues. For all these reasons, a great swap—taxing pollution more and income less, while streamlining environmental regulation and compliance costs, would be good politics and good policy. For President Trump, it presents a Nixon-to-China opportunity, in this case to break the stalemate over energy and climate.