Nobel prize winner tells Clinton: Tax fossil fuels

Stiglitz: 'Wrong' to rush TPP through Congress
Stiglitz: 'Wrong' to rush TPP through Congress

Nobel prize winning economist Joseph Stiglitz has some advice for Hillary Clinton: Tax fossil fuels.

Stiglitz, who is an adviser to Clinton, says taxing carbon would be the best way to address climate change -- and boost the U.S. economy.

The move would immediately lead to higher prices for oil, gas and coal. It would also hike the cost of anything that uses those fuels such as electricity and transportation. The goal is to force Americans to find alternatives that are cheaper and better for the planet.

Taxes typically hinder the economy, but Stiglitz believes this one would help.

"I think a carbon tax would stimulate the economy," Stiglitz told CNNMoney. He says it would lead many firms to remodel their factories and redesign their supply chains, which would generate jobs and growth.

Related: Nobel prize winner Stiglitz calls TPP 'outrageous'

Stiglitz says he has pitched the plan to her team, although he understands why the campaign has not adopted it as part of her 2016 election platform.

"There's nothing more important than making sure [Clinton] gets elected as opposed to Trump," says Stiglitz. "One has to be sensitive to what you can sell in a campaign."

Clinton calls climate change "an urgent threat and a defining challenge of our time." She vows to reduce greenhouse gas emissions by "up to 30%" below 2005 levels by 2025. It's a target in line with what President Obama agreed to at the Paris climate conference.

Her current plan does not go as far as Stiglitz's. Instead, she proposes a big investment in renewable energy and tougher standards on pollution and energy efficiency.

Related: Here's how much Hillary Clinton's tax plan would hit the rich

Republican Donald Trump has said he doesn't believe in climate change and that Democratic plans to address it are "just a very, very expensive form of tax."

One of the biggest concerns about a tax on carbon is that it would be a major burden on the poor and middle class. The Congressional Budget Office estimates that costs for a typical middle class family would go up about $600 a year.

To ensure that the poor aren't hit too hard by a carbon tax, Stiglitz proposes giving them some sort of credit or rebate. The aid to the poor could be funded by revenues from the carbon tax.

Bernie Sanders, who ran against Clinton in the primary, supports a tax on carbon.

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