Taxing Uber-Polluters: Carbon Inequality and Support for Wealth Taxation to Finance the Green Transition

Leo Ahrens, Björn Bremer and Lukas Hakelberg
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Björn Bremer: Central European University
Lukas Hakelberg: Leuphana University of Lüneburg

No h6rxc_v1, OSF Preprints from Center for Open Science

Abstract: Carbon inequality implies that wealthy individuals contribute more to climate change than asset-poor indi-viduals, which is primarily driven by higher levels of consumption and investment in carbon-intensive in-dustries. Yet the prevailing policy response—the carbon tax—is regressive, as it places a higher relative bur-den on low-income than on high-income households. It is therefore politically unpopular, given that percep-tions of distributional fairness strongly shape public support for climate policies. We conduct two comple-mentary survey experiments to examine preferences over a recent policy proposal developed in response to accumulating evidence of carbon inequality: wealth taxation to finance the green transition. Using a ran-domized controlled trial, we find that while baseline support for wealth taxation is high among respondents in Germany, exposing them to a compensatory argument emphasizing carbon inequality does not further increase this support. However, emphasizing carbon inequality increases support for using wealth tax reve-nues to finance the green transition, making this the most popular option for using the revenue. A conjoint survey experiment further demonstrates that spending wealth tax revenue on public investment in transport infrastructure, subsidies for private investment in low-carbon technologies, and redistributive measures such as a lump-sum payment to all households paying carbon taxes receives the highest support among German respondents. In contrast, subsidies for the purchase of electric vehicles and investment in geo-engineering are highly unpopular. These findings suggest that invoking carbon inequality can help build democratic majorities for using wealth taxation to finance investment in climate change mitigation and adaptation. Hence, there is a path towards lower emissions and greater climate resilience that is unlikely to produce popular backlash.

Date: 2025-05-29
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Persistent link: https://EconPapers.repec.org/RePEc:osf:osfxxx:h6rxc_v1

DOI: 10.31219/osf.io/h6rxc_v1

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