WASHINGTON—Resources for the Future (RFF) Darius Gaskins Senior Fellow Dallas Burtraw and Research Assistant Peter Vail are out today with the second blog post in a two-part series, looking at six states considering the use of a carbon tax to reduce carbon emissions in the absence of a comprehensive national policy.
In their first post, the authors gave an overview of state carbon tax proposals under consideration in Massachusetts, New York, Oregon, Rhode Island, Vermont, and Washington. Today, in Putting Carbon Tax Revenues to Work: Efficiency and Distributional Issues, they investigate the proposed uses—and consequences—associated with the revenues that would be derived.
All of the various proposed state policies stand to raise considerable revenue, but how this revenue is used will be vital in determining the outcomes. The authors note, for example, that providing rebates (especially to low-income households) is an effective means to ensure equitable outcomes. However, if states use the revenue to reduce existing distortionary taxes, that action could lead to more economic growth. This trade-off, they conclude, is one of the important issues that the states will have to face in designing their policies.
Read the new post: Putting Carbon Tax Revenues to Work: Efficiency and Distributional Issues.
Read the first installment: A Look at Six States Proposals to Tax Carbon.