- By driving changes to the climate, carbon emissions will impose major long-term economic costs, both here in the U.S. and around the world.
- Carbon taxes are an option to make the market reflect future costs of carbon emissions, discouraging emissions and incentivizing development and implementation of clean technology.
- Carbon taxes also come with design challenges and economic costs, including reduced economic growth and a relatively heavy tax burden on low-income households.
- The problems of a carbon tax are shared by other environmental policies, as regulation disproportionately burdens low-income people, while subsidies for green technology tend to benefit the wealthy.
- The revenues from a carbon tax could be used to offset growth and distributional concerns by lowering more distortionary taxes elsewhere and providing cash payments to households.
Source Tax Foundation
