IDEAS home Printed from https://ideas.repec.org/p/cbo/wpaper/57399.html
   My bibliography  Save this paper

Distributional Effects of Reducing Carbon Dioxide Emissions With a Carbon Tax: Working Paper 2021-11

Author

Listed:
  • Dorian Carloni
  • Terry Dinan

Abstract

Putting a price on emissions of carbon dioxide, either by taxing them or by establishing a cap- and-trade program, is one policy that lawmakers could consider to address climate change. Although such a policy could encourage cost-effective reductions in emissions throughout the economy, lawmakers have expressed concern about whether it would disproportionately affect lower-income households.Determining the distributional effects—that is, the effects on households at different income levels—of a policy that would price carbon emissions (referred to in this

Suggested Citation

  • Dorian Carloni & Terry Dinan, 2021. "Distributional Effects of Reducing Carbon Dioxide Emissions With a Carbon Tax: Working Paper 2021-11," Working Papers 57399, Congressional Budget Office.
    • Handle: RePEc:cbo:wpaper:57399
    as

    Download full text from publisher

    File URL: https://www.cbo.gov/system/files/2021-09/57399-carbon-tax.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. William M. Gentry & R. Glenn Hubbard, 1997. "Distributional Implications of Introducing a Broad-Based Consumption Tax," NBER Chapters, in: Tax Policy and the Economy, Volume 11, pages 1-48, National Bureau of Economic Research, Inc.
    2. Alan J. Auerbach, 2019. "Tax Equivalences and Their Implications," Tax Policy and the Economy, University of Chicago Press, vol. 33(1), pages 81-107.
    3. Matthew Smith & Owen Zidar & Eric Zwick, 2020. "Top Wealth in America: New Estimates and Implications for Taxing the Rich," Working Papers 264, Princeton University, Department of Economics, Center for Economic Policy Studies..
    4. Congressional Budget Office, 2020. "The Distribution of Household Income, 2017," Reports 56575, Congressional Budget Office.
    5. Goulder, Lawrence H. & Hafstead, Marc A.C. & Kim, GyuRim & Long, Xianling, 2019. "Impacts of a carbon tax across US household income groups: What are the equity-efficiency trade-offs?," Journal of Public Economics, Elsevier, vol. 175(C), pages 44-64.
    6. Julie Anne Cronin & Don Fullerton & Steven Sexton, 2019. "Vertical and Horizontal Redistributions from a Carbon Tax and Rebate," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 6(S1), pages 169-208.
    7. Gilbert E. Metcalf & James H. Stock, 2020. "Measuring the Macroeconomic Impact of Carbon Taxes," AEA Papers and Proceedings, American Economic Association, vol. 110, pages 101-106, May.
    8. Cronin, Julie Anne & Lin, Emily Y. & Power, Laura & Cooper, Michael, 2013. "Distributing the Corporate Income Tax: Revised U.S. Treasury Methodology," National Tax Journal, National Tax Association;National Tax Journal, vol. 66(1), pages 239-262, March.
    9. Rausch, Sebastian & Metcalf, Gilbert E. & Reilly, John M., 2011. "Distributional impacts of carbon pricing: A general equilibrium approach with micro-data for households," Energy Economics, Elsevier, vol. 33(S1), pages 20-33.
    10. Congressional Budget Office, 2017. "CBO's New Framework for Analyzing the Effects of Means-Tested Transfers and Federal Taxes on the Distribution of Income: Working Paper 2017-09," Working Papers 53345, Congressional Budget Office.
    11. Jean-Thomas Bernard and Maral Kichian, 2021. "The Impact of a Revenue-Neutral Carbon Tax on GDP Dynamics: The Case of British Columbia," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 205-224.
    12. Laura Power & Austin Frerick, 2016. "Have Excess Returns to Corporations Been Increasing Over Time?," National Tax Journal, National Tax Association;National Tax Journal, vol. 69(4), pages 831-846, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vona, Francesco, 2023. "Managing the distributional effects of climate policies: A narrow path to a just transition," Ecological Economics, Elsevier, vol. 205(C).
    2. Semet, Raphaël, 2024. "Coordinating social equity and emissions: Challenges in carbon tax policy," Energy Policy, Elsevier, vol. 185(C).
    3. Jan Ditzen & Francesco Ravazzolo, 2022. "Dominant Drivers of National Inflation," Working Papers No 08/2022, Centre for Applied Macro- and Petroleum economics (CAMP), BI Norwegian Business School.
    4. Ravigné, Emilien & Ghersi, Frédéric & Nadaud, Franck, 2022. "Is a fair energy transition possible? Evidence from the French low-carbon strategy," Ecological Economics, Elsevier, vol. 196(C).
    5. Sommer, Stephan & Mattauch, Linus & Pahle, Michael, 2022. "Supporting carbon taxes: The role of fairness," Ecological Economics, Elsevier, vol. 195(C).
    6. Marin, Giovanni & Vona, Francesco, 2021. "The impact of energy prices on socioeconomic and environmental performance: Evidence from French manufacturing establishments, 1997–2015," European Economic Review, Elsevier, vol. 135(C).
    7. Diego R. Känzig & Maximilian Konradt, 2024. "Climate Policy and the Economy: Evidence from Europe’s Carbon Pricing Initiatives," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 72(3), pages 1081-1124, September.
    8. Frondel, Manuel & Schubert, Stefanie A., 2021. "Carbon pricing in Germany's road transport and housing sector: Options for reimbursing carbon revenues," Energy Policy, Elsevier, vol. 157(C).
    9. Metcalf, Gilbert E., 2019. "The distributional impacts of U.S. energy policy," Energy Policy, Elsevier, vol. 129(C), pages 926-929.
    10. Moritz A. Drupp & Ulrike Kornek & Jasper N. Meya & Lutz Sager, 2021. "Inequality and the Environment: The Economics of a Two-Headed Hydra," CESifo Working Paper Series 9447, CESifo.
    11. Garaffa, Rafael & Cunha, Bruno S.L. & Cruz, Talita & Bezerra, Paula & Lucena, André F.P. & Gurgel, Angelo C., 2021. "Distributional effects of carbon pricing in Brazil under the Paris Agreement," Energy Economics, Elsevier, vol. 101(C).
    12. Kahn,Matthew Edwin & Lall,Somik V., 2022. "Will the Developing World’s Growing Middle Class Support Low-Carbon Policies ?," Policy Research Working Paper Series 10125, The World Bank.
    13. Laure Baratgin & Emmanuel Combet, 2022. "Quelques pistes pour concilier des objectifs sociaux, économiques et écologiques," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(1), pages 121-146.
    14. Vandyck, Toon & Weitzel, Matthias & Wojtowicz, Krzysztof & Rey Los Santos, Luis & Maftei, Anamaria & Riscado, Sara, 2021. "Climate policy design, competitiveness and income distribution: A macro-micro assessment for 11 EU countries," Energy Economics, Elsevier, vol. 103(C).
    15. Fremstad, Anders & Paul, Mark, 2019. "The Impact of a Carbon Tax on Inequality," Ecological Economics, Elsevier, vol. 163(C), pages 88-97.
    16. Frondel, Manuel & Helmers, Viola & Mattauch, Linus & Pahle, Michael & Sommer, Stephan & Schmidt, Christoph M. & Edenhofer, Ottmar, 2021. "Akzeptanz der CO₂-Bepreisung in Deutschland: Evidenz für private Haushalte vor Einführung des CO₂-Preises," RWI Materialien 147, RWI - Leibniz-Institut für Wirtschaftsforschung.
    17. Missbach, Leonard & Steckel, Jan Christoph & Vogt-Schilb, Adrien, 2024. "Cash transfers in the context of carbon pricing reforms in Latin America and the Caribbean," World Development, Elsevier, vol. 173(C).
    18. Böhringer, Christoph & Rutherford, Thomas F. & Schneider, Jan, 2021. "The incidence of CO2 emissions pricing under alternative international market responses," Energy Economics, Elsevier, vol. 101(C).
    19. Linden, Jules & O’Donoghue, Cathal & Sologon, Denisa M., 2024. "The many faces of carbon tax regressivity—Why carbon taxes are not always regressive for the same reason," Energy Policy, Elsevier, vol. 192(C).
    20. Batten, Sandra & Millard, Stephen, 2024. "Energy and climate policy in a DSGE model of the United Kingdom," Bank of England working papers 1064, Bank of England.

    More about this item

    JEL classification:

    • H00 - Public Economics - - General - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cbo:wpaper:57399. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/cbogvus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.