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Considering a US Carbon Tax
Numerous countries and regions around the globe are using a carbon tax to regulate carbon dioxide emissions, and many experts believe that such a policy could be economically efficient, growth-enhancing, and consistent with long-term mitigation goals for the United States as well. RFF experts are working with policymakers, industry stakeholders, and academic experts to answer their questions about the design elements and potential effects of a federal carbon tax policy, including the economic and environmental impacts, possible uses of tax revenues, potential employment ramifications, and how different groups and regions would be affected.
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Carbon Tax FAQs
- The Initial Incidence of a Carbon Tax across Income Groups. In this August 2014 RFF discussion paper, RFF’s Rob Williams, Hal Gordon, Dallas Burtraw, and Richard D. Morgenstern, with the University of Alberta’s Jared Carbone, look at the distributional consequences of carbon taxes at various levels, and how revenue recycling options can affect the tax’s regressivity.
- Using the Tax System to Address Competition Issues with a Carbon Tax. In this RFF discussion paper, Gilbert E. Metcalf of Tufts University and the National Bureau of Economic Research considers how tax reductions financed by a carbon tax could mitigate the need for specific relief for energy-intensive, trade-exposed sectors.
- Tax Reform and Environmental Policy: Options for Recycling Revenue from a Tax on Carbon Dioxide. In this RFF discussion paper, RFF University Fellow Lawrence H. Goulder of Stanford University and RFF Fellow Marc Hafstead use their model of the US economy to assess the economic impacts of a carbon tax under alternative methods of recycling the tax revenues.
- Taxing Electricity Sector Carbon Emissions at Social Cost. RFF’s Anthony Paul, Blair Beasley, and Karen Palmer look at how a carbon tax—based on a range of social cost of carbon estimates—would affect electricity emissions, consumption, fuel use, investment, and regional prices.
- Deficit Reduction and Carbon Taxes: Budgetary, Economic, and Distributional Impacts. Dallas Burtraw, Dick Morgenstern, Rob Williams and the University of Alberta’s Jared Carbone look at the fiscal, economic growth and environmental effects of alternative uses of potential carbon tax revenues, including revenue neutral tax swaps, household rebates, and deficit reduction. This work is also discussed in a 2014 Resources magazine article.
- Comparing the Clean Air Act and a Carbon Price. Nathan Richardson and Art Fraas compare the Clean Air Act and a hypothetical carbon tax as a means of regulating US greenhouse gas emissions, assessing both policies and, in particular, the features that are important to a comparative evaluation.
- Mixing It Up: Power Sector Energy and Regional and Regulatory Climate Policies in the Presence of a Carbon Tax. In this RFF discussion paper, Karen Palmer and Dallas Burtraw examine how a carbon tax would interact with state or regional greenhouse gas programs, renewable subsidies, state renewable portfolio standards programs, and other subnational policies.
- Progressing to a Fair Carbon Tax: Policy Design Options and Impacts to Households. Danny Morris and Clayton Munnings review the existing literature on the distributional consequences of carbon pricing regimes, including both carbon taxes and cap-and-trade programs.
- Taxing Carbon: Potential Deficit & Emissions Reductions. In this Spring 2013 Resources magazine article, Rob Williams describes results of a “bookend analysis” of two different carbon tax scenarios, one designed to meet a designated fiscal goal and one designed to meet a climate goal.
- Ensuring Competitiveness under a US Carbon Tax. In this Spring 2013 Resources magazine article, Dick Morgenstern, Carolyn Fischer and Nathan Richardson compare policy options for mitigating the potential impacts of a carbon tax on energy-intensive, trade-exposed industries, including border carbon adjustments, output-based rebates, and exemptions
- Climate Policy and Fiscal Constraints: Do Tax Interactions Outweigh Carbon Leakage? Carolyn Fischer and the US International Trade Commission’s Alan Fox explore the implications of labor tax interactions for the cost-effectiveness of border adjustments and other measures to cope with carbon leakage.
- The Variability of Potential Revenue from a Carbon Tax. Implementing a carbon tax in the United States could help reduce the large and growing federal budget deficit as well as emissions of carbon dioxide. An issue brief by Karen Palmer, Anthony Paul, and Matt Woerman helps explain what policymakers could expect in terms of revenue.
Find more research on carbon pricing here.