Full Title: Progressing to a Fair Carbon Tax: Policy Design Options and Impacts to Households
Author(s): Daniel F. Morris and Clayton Munnings
Publisher(s): Resources for the Future
Publication Date: 5/2013
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In his 2013 State of the Union address, President Obama pledged to use his executive authority to reduce greenhouse gas emissions and combat climate change unless Congress resurrected its previous efforts to pass a market-based solution through carbon pricing. Congress, however, remains reticent to revisit cap-and-trade, and a carbon tax appears for the time being to be similarly unpopular.
This issue brief aims to explain the complexities of the distributional consequences of carbon pricing, specifically carbon taxes, based on over 20 years of economic research. It highlights major findings from the economic literature and describes the pathways through which US households may be affected by carbon taxes, what considerations are important in determining the regressivity of carbon pricing, what might be experienced by different regions of the country, and how vulnerable populations could be effectively compensated.