How to make a carbon tax reform progressive: The role of subsistence consumption

David Klenert and Linus Mattauch

MPRA Paper from University Library of Munich, Germany

Abstract: A major obstacle for introducing carbon pricing are its distributional implications: climate policy is believed to be regressive. We illuminate the role of carbon-intensive subsistence consumption for the prospect of making carbon pricing progressive. The distributional impacts of a carbon tax reform depend on the revenue recycling options: we prove that lump-sum transfers proportional to income and linear income tax cuts make the reform regressive and that this is due only to subsistence consumption. By contrast, returning the revenue as uniform lump-sum transfers renders the carbon tax reform progressive.

Keywords: carbon tax reform; distribution; revenue recycling; inequality; non-homothetic preferences (search for similar items in EconPapers)
JEL-codes: D3 D60 E62 H22 H23 (search for similar items in EconPapers)
Date: 2015-08-03
New Economics Papers: this item is included in nep-ene, nep-env and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/65919/1/MPRA_paper_65919.pdf original version (application/pdf)

Related works:
Journal Article: How to make a carbon tax reform progressive: The role of subsistence consumption (2016)
Working Paper: How to make a carbon tax reform progressive: The role of subsistence consumption (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:65919

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().