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Columnist Andrew Leahey says a per-head tax on livestock could be deployed quickly and easily, counteracting carbon emissions from agriculture.
Taxing carbon emissions from livestock could help offset the effects of a substantial source of greenhouse gas emissions.
The US has 87.2 million cattle contributing to 10% of the nation’s greenhouse gas output from agriculture. A tax on US livestock would drive significant environmental benefits and promote more sustainable agricultural practices.
Such a tax could serve as a viable and immediate policy solution, with generated revenue earmarked for reforestation and responsible land use aimed at compensating for agricultural carbon emissions.
While the fossil fuel industry requires a gradual phase-out over decades, a livestock tax would reflect a more holistic approach to pricing greenhouse gases throughout the economy. It also would be an easy-to-pursue, pragmatic step toward mitigating climate change.
The federal government spends around $30 billion per year on subsidies for farm businesses and agriculture, according to calculations from the Cato Institute, a libertarian think tank.
The Congressional Budget Office put the total outlay from the last major farm bill, the 2018 Farm Act, as $428 billion over five years. An exact figure can be difficult to pin down, but it’s clear that substantial public expenditures subsidize agriculture and livestock production.
The US faces a serious challenge from agricultural emissions, which historically has been behind only electricity generation, transportation, industry, and residential sources in terms of emissions. Studies have put the worldwide contribution of greenhouse gases from livestock at between 11.1% and 19.6% of the total. Even taking the lower figure, this constitutes a huge amount of emissions coming from cow burps.
Methane, emitted from cattle digestion and manure as well as other livestock to a lesser degree, is a potent greenhouse gas with a global warming potential higher than that of carbon dioxide. Best estimates are that about 30% of the observed rise in global temperatures since the 18th century are attributable to methane emissions.
While the US has focused on reducing emissions from the energy and transportation sectors, agricultural emissions remain overlooked. In transportation, the government is subsidizing cleaner alternatives to gas powered vehicles.
There is no such focus in agriculture. Subsidizing livestock without taxing emissions from them is the agricultural equivalent of providing federal tax credits for electric and internal combustion engine vehicles. It amounts to spending public money to both carbonize and decarbonize the economy.
The idea of a “cow tax” isn’t idle speculation—Denmark has laid the groundwork for a robust policy to tax livestock emissions beginning in 2030. The Danish government, in collaboration with agricultural and environmental interests, implemented a carbon dioxide tax on livestock as part of its Green Tripartite Agreement.
The tax calls for a fee of 300 Danish krone per ton of CO2 in 2030, increasing to 750 per ton in 2035—about $43 and $108, respectively. The policy creates a corresponding subsidy program that provides grants for carbon capture and reforestation.
Denmark’s approach demonstrates how targeted tax policies can manage agricultural emissions—emphasizing the importance of balancing environmental goals with the economic realities of farming. Incentives and subsidy programs take effect alongside the tax to help farmers transition to more sustainable practices. The tax isn’t an immutable economic reality, but it has a steering effect on farming practices.
Despite its potential, the Danish approach only captures one component of livestock greenhouse gas emissions. Cows produce substantial carbon dioxide but also between 154 and 264 pounds of methane gas per year. A properly calibrated tax that internalizes the cost of raising and processing livestock would encompass both carbon dioxide and methane emissions.
The US should consider adopting the concept pioneered by Denmark but take it a step further and incorporate the cost of methane emissions. A per-head tax on livestock that rolls in the cost of carbon dioxide and methane emissions would better reflect the true environmental cost of raising livestock.
This can be done either through a per-head tax or an offsetting of existing agricultural subsidies by the amount and type of livestock being raised—with an opportunity for farmers to adopt sustainable practices to fully receive their subsidy.
A per-head tax that encompasses the environmental cost of raising livestock would necessarily raise the price of meat and dairy, and farmers would pass the cost along to the consumer. This would be unpopular, especially considering today’s higher consumer prices in general—beef specifically.
Such a tax might be more politically viable by borrowing one more idea from abroad. The Austrian Klimabonus, funded by a general carbon tax, provides cash payments to anyone living in Austria for at least six months. The underlying logic is that polluters targeted by the carbon tax externalize a cost to residents—so the latter should be compensated for the imposition.
The financial burden of a per-head livestock tax on greenhouse gas emissions could be offset if structured to include both subsidies to farmers adopting sustainable practices and credits to individual consumers. Such a policy would be more palatable to the public and help achieve environmental goals while maintaining economic stability.
Andrew Leahey is a tax and technology attorney, principal at Hunter Creek Consulting, and adjunct professor at Drexel Kline School of Law. Follow him on Mastodon at @andrew@esq.social
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