New Blog Post: “Job-Killing” Carbon Taxes?
WASHINGTON—The following are excerpts from a new blog posted today by RFF Fellow Marc Hafstead, Senior Fellow Roberton C. Williams III, and Postdoctoral Fellow Yunguang Chen. The subject is a new analysis of the employment effects of a carbon tax:
“On April 26, House Majority Whip Steve Scalise (R-LA) and Rep. David B. McKinley (R-WV) introduced a nonbinding resolution that would allow lawmakers to formally denounce a carbon tax in Congress. Said Scalise in support of the new resolution: ‘[S]ome liberal Washington special interests continue to pursue a radical agenda that includes imposing a job-killing carbon tax….’
“The ‘job-killing’ rhetoric against a carbon tax is familiar: when President Trump announced his intention to pull the United States out of the Paris Agreement, he cited a report from NERA Economic Consulting, stating that ‘Compliance with the terms of the Paris accord … could cost America as much as 2.7 million jobs in 2025’.
“But as we show in a new analysis looking specifically at jobs … the long-run impacts of a carbon tax on US employment are small.
“Our model estimates that a carbon tax of $40 per ton of carbon dioxide (rising over time at the rate of inflation) with the revenue returned to households via rebates would increase long-run unemployment by 0.3 percentage points. Given that the labor force is about 160 million workers, this translates into total long-run net job losses of about 480,000. By comparison, the economy has added 191,000 jobs each month, on average, from April 2017 to April 2018. If revenues from a carbon tax were used to reduce payroll taxes or income taxes on labor, the impacts of the carbon tax on long-run unemployment would be even smaller: an increase of 0.05 percentage points (long-run net job losses of about 80,000).”
Read the full post: “Job-Killing” Carbon Taxes?
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