Full Title: Getting to an Efficient Carbon Tax: How the Revenue is Used Matters
Author(s): Jared Carbone, Richard D. Morgenstern, Roberton C. Williams III, Dallas Burtraw
Publisher(s): Resource for the Future
Publication Date: January 1, 2014
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Description (excerpt):
Despite the widespread view among economists and policymakers that the US federal tax system needs reform over the long term, there is little consensus on the specifics. The system is inefficient, excessively distorting the economy for the amount of revenue raised. The notion of lower marginal tax rates and a broader base has wide appeal, but no politically feasible path to achieve such goals is apparent. Further, short of substantial cuts in federal programs at a scale and scope not being seriously considered, the need for at least some more tax revenue over the long term seems almost inevitable. How those revenues should be raised is an open question.
The results of our analysis show that holding all other taxes in the economy constant, the imposition of a carbon tax represents a potentially substantial revenue source for the United States, on the order of $160 to $360 billion in gross revenues per year, or $1.6 to $3.6 trillion over the decade (2012$). How these revenues are used has a huge effect on the efficiency and fairness of a carbon tax policy.