Many policy proposals to limit greenhouse-gas emissions revolve around efforts to tax carbon emissions. But many studies point out that such energy taxes are regressive. This column models the distributional impacts of carbon pricing on over 15,000 US households, challenging the view that the policy by itself is regressive.
The distributional impacts of energy and climate policies can be assessed across a number of dimensions. Goulder and Parry (2008) note that two dimensions in particular have attracted attention:
the impact on energy-intensive industry; and
the impact across households of differing incomes.
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