Reacting to Greenhouse Gas Emissions: A Carbon Tax to Meet Emission Targets

Gilbert Metcalf

No 731, Discussion Papers Series, Department of Economics, Tufts University from Department of Economics, Tufts University

Abstract: In previous papers I have described a revenue and distributionally neutral approach to reducing U.S. greenhouse gas emissions that uses a carbon tax. The revenue from the carbon tax is used to finance an environmental earned income tax credit designed to be distributionally neutral. The carbon tax reform proposal is also revenue neutral and avoids conflating carbon policy with debates over the appropriate size of the federal budget. This paper describes a variant to address concerns of environmentalists that a carbon tax does not provide certainty of emission reductions over the control period. The Responsive Emissions Autonomous Carbon Tax (REACT) combines the short-run price stability of a carbon tax with the long-run certainty of emission reductions over a control period.

Date: 2009
New Economics Papers: this item is included in nep-ene, nep-env and nep-res
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Persistent link: https://EconPapers.repec.org/RePEc:tuf:tuftec:0731

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