I agree - but that isn't a consumer decision (not a decision made at the time of consumption). A government agency has to determine the cost of the externalities (where the science and economics isn't easy) and then set taxes accordingly (not always politically viable).
Better, the government agency could be removing the reason that the cost can be externalized in the first place.
Admittedly, this is difficult to do for resource extraction or pollution costs. But consider that we can recover the costs of pollution in the ground and (to a lesser extent) the water. The reason we can't internalize the cost of CO2 emissions is because we won't recognize any ownership interest in the air. I'm not sure how to do that either, but I'm hopeful that we could think of something if we'd at least acknowledge this.
Taxes are not the right answer. If you are impacted by a negative externality then you have legitimate standing to sue the source of the externality in civil court (individually or as a group) in accordance with how much the side effects of their actions cost you. If you can't demonstrate that you were actually affected, or the damage is too trivial to be worth taking to court, then for all practical purposes there is no externality and the government has no business getting involved.
Civil courts are not equipped to deal with this issue. At best you will get a lot of very rich lawyers. At worst you will get inaction and a lot of very rich lawyers.
Taxes are a traditional way of pricing in a market externality. It seems appropriate here.
Politicians are not equipped to properly assess the externality incurred in each case and see that the affected party is compensated in accordance with the degree to which they were affected. Taxes paint with a very broad brush, do nothing to compensate the victims, and essentially make the government an accomplice in the externality—once the tax is in place, anything which actually reduced the externality will negatively impact their revenue.
It is impossible to enumerate the individuals affected by carbon output. So who cares about compensation?
The point of taxing carbon is simply to get less carbon. Full stop. Economists (especially the free-market economists!) broadly agree that it will work. Why are we still having this conversation?
> It is impossible to enumerate the individuals affected by carbon output.
There are no non-enumerable sets of individuals. Presumably you meant "everyone is affected by carbon output". That may even be true. But not everyone is affected equally. Some of the effects may even be beneficial for certain individuals, e.g. a warming climate means more productive farmland in far-northern latitudes. Those living on the coasts (or on islands) are more affected by rising sea levels than those living on higher ground well away from the ocean. Some of that is by choice (you knew sea levels were rising when you bought coastal land) and some is not. All of this needs to be decided on a case-by-case basis before proper compensation can be determined.
> So who cares about compensation?
Presumably the people who are most affected by human-created climate change, and thus would qualify for the most compensation.
> The point of taxing carbon is simply to get less carbon. Full stop.
This thread is about carbon emissions as a negative externality, and properly pricing that externality. When one person's actions have a negative side effect on someone else, that should be handled through the courts in a process which ends with the victim being made whole. Taxes don't accomplish that. Even if we assume the tax is correctly calculated to precisely equal the damage to the victim, the tax money doesn't go to the victim; it just ends up in the government's general fund.
If the goal is simply to use taxes as a blunt instrument to implement the government's social policies ("to get less carbon") without regard for externalities then it might "work" in a sense. All else being equal you do generally get less of things that are taxed—though tax proponents tend to downplay this when it comes to taxes on productivity, i.e. income taxes. On the other hand, carbon taxes give the government an incentive to maintain carbon emissions as an ongoing revenue stream, so it could have the opposite effect over time. (Any proposal with the intended or expected effect of reducing carbon emissions would need to somehow find a way to replace that part of the tax revenue.)
In theory, that works. In practice, I can't afford enough lawyers to take on Big Business. I'm also not sure how I prove damages for something like climate change. But yet climate change is real. And by the time I have obvious damages, it will be too late.
If you're part of a class which is demonstrably harmed in aggregate by climate change (for example, owners of coastal property), you could hire lawyers as a class to sue those responsible. Probably even on a contingency basis.
Most people are not demonstrably harmed by climate change, and thus would have no standing to sue. Which is as it should be. If you can't prove that emitting CO2 is actually harmful, what justification do you have for imposing the proposed carbon tax? Other than raising general tax revenues, that is—but the proponents of carbon taxes claim that it's for the environment, not to cover a shortfall in the budget.
