Journal Article

CARBON TAXES AND FISCAL REFORM IN THE UNITED STATES

Goettle, Richard J., Wilcoxen, Peter J., Jorgenson, Dale W., Ho, Mun S.

2015

Overview

In this paper we consider the economic and environmental impacts of taxes on emissions of greenhouse gases. Substituting carbon taxes for other sources of revenue or using the proceeds to reduce deficits or finance expenditures are the keys to integration of carbon taxes with fiscal reform. Recycling carbon tax revenues through reductions of capital income tax rates provides the largest margin of economic benefits over the costs of emissions control. Reducing capital tax rates lowers the cost of capital services and increases the rate of capital formation. This mechanism provides a dramatic illustration of the power of intertemporal general equilibrium modeling in the design of new energy and environmental policies for the United States.

• Publisher: National Tax Association,The University of Chicago Press,University of Chicago Press
• Subject: Analysis / Capital / Capital costs / Capital formation / Capital levy / Capital tax / Carbon / Carbon taxes / Economic impact / Economics / Emission charges / Emissions control / Emissions policy / Energy policy / Environmental impact / Environmental policy / Environmental tax / Equity / Fiscal policy / Forum: Carbon Taxation and Fiscal Reform / Greenhouse gases / Income taxes / Influence / Law and economics / Lump sum payments / Recycling / Reforms / Revenue / Social welfare / Studies / Tax rates / Tax reform / Tax revenue estimating / Tax revenues / Taxation / Taxes