Skip to main content
Article thumbnail
Location of Repository

The Incidence of U.S. Climate Policy: Where You Stand Depends on Where You Sit

By Dallas Burtraw, Richard Sweeney and Margaret Walls

Abstract

Federal policies aimed to slow global warming would impose potentially significant costs on households that vary depending on the policy approach that is used. This paper evaluates the effects of a carbon dioxide cap-and-trade program on households in each of 11 regions of the country and sorted into annual income deciles. We find tremendous variation in the incidence (the distribution of cost) of the policy. The most important feature that affects households is how the policy distributes the value created by placing a price on CO2 emissions. We evaluate 10 policy alternatives that yield results that range from moderately progressive (expansion of the Earned Income Tax Credit, investments in efficiency and capand- dividend) to severely regressive (reduce income taxes, free distribution to incumbent emitters and reduction of the payroll tax). To varying degrees the allocation of the value of emissions allowances amplifies or potentially resolves the tradeoff between equity and efficiency.cap-and-trade, allocation, distributional effects, cost burden, equity

OAI identifier:

Suggested articles

Citations

  1. (1999). A Distributional Analysis of Green Tax Reforms.
  2. (1999). A Proposal for Credible Early Action in U.S. Climate Policy. Washington, DC: Resources for the Future.
  3. (1993). A Survey of Energy Demand Elasticities in Support of the Development of the NEMS.
  4. (2008). Analysis of U.S. Greenhouse Gas Tax Proposals.
  5. (2004). Are Emissions Permits Regressive?
  6. Average Fuel Economy Standards: Model Years 2011-2015. Docket No.
  7. (2007). Cap and Dividend: How to Curb Global Warming While Protecting the Incomes of American Families. PERI Working Paper Series.
  8. (2008). Compensation for Electricity Consumers under a U.S. CO2 Emissions Cap. Discussion paper 08-25. Washington, DC: Resources for the Future.
  9. (2008). Compensation Rules for Climate Policy in the Electricity Sector.
  10. (1994). Consumer Response to the Timing of Income: Evidence from a Change in Tax Withholding.
  11. (1995). Consumption Taxes in a Life-Cycle Framework: Are Sin Taxes Regressive?
  12. (2003). Cost Heterogeneity and the Potential Savings from Market-Based Policies.
  13. (1999). Distributional Aspects of an Environmental Tax Shift: The Case of Motor Vehicle Emissions Taxes.
  14. (2004). Distributional Effects of Alternative Vehicle Pollution Control Policies.
  15. (2002). Distributional Effects of Carbon Allowance Trading: How Government Decisions Determine Winners and Losers.
  16. (2005). Effective Marginal Tax Rates on Labor Income.
  17. (2008). Energy Information Administration.
  18. (1994). Environmental Levies and Distortionary Taxation.
  19. (2008). Evidence of a Shift in the Short-Run Price Elasticity of Gasoline Demand.
  20. (2006). Fuel Efficiency and Motor Vehicle Travel: The Declining Rebound Effect.”
  21. (1993). How Should We Measure Distribution?
  22. (2008). Integrative Environmental Research (CIER).
  23. (1994). Is a Value-Added Tax Regressive? Annual Versus Lifetime Incidence Measures.
  24. (1989). Lifetime Incidence and the Distributional Burden of Excise Taxes.
  25. (1977). Measurement of Tax Progressivity.
  26. (1993). Measuring the Distributional Effects of Corrective Taxation.
  27. (1996). Optimal Environmental Taxation in the Presence of Other Taxes: General Equilibrium Analyses.
  28. (1993). Paper presented at Allied Social Science Association.
  29. (2007). Reducing the Deficit Through Better Tax Policy.
  30. (2007). Regional Patterns of U.S. Household Carbon Emissions. Resources for the Future, Unpublished manuscript.
  31. (1999). The Cost-Effectiveness of Alternative Instruments for Environmental Protection in a Second-Best Setting.
  32. (2007). The Incidence of a U.S. Carbon Tax: A Lifetime and Regional Analysis. NBER Working Paper Series. Working Paper 13553.
  33. (2007). The Incidence of Pollution Control Policies,"
  34. (2007). the Treasury.
  35. (1999). When Can Carbon Abatement Policies Increase Welfare? The Fundamental Role of Distorted Factor Markets.
  36. (1993). Who Bears the Lifetime Tax Burden? Washington, DC: The Brookings Institution.
  37. (2001). Who Owns the Sky? Our Common Assets and the Future of Capitalism.
  38. (1994). Who Pays Broad-Based Energy Taxes?

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.