Vertical and Horizontal Redistributions from a Carbon Tax and Rebate
By J. Cronin, D. Fullerton, Steven Sexton. Journal of the Association of Environmental and Resource Economists, 2019
158 citations recorded by the source corpus.
Are carbon taxes regressive? To calculate effects of a carbon tax on each family’s expenditures, plus distributional effects of three revenue-recycling mechanisms, we employ the US Treasury Distribution Model. It includes 322,000 tax returns, matched social security information, imputations from the Consumer Expenditure Survey, and an input-output matrix to calculate output prices. Accounting for statutory indexing of federal transfer programs, the calculated carbon tax burden as a fraction of consumption is progressive. Rebate of revenues via transfers makes it even more progressive. Within each decile, we find large variation in energy demands such as for heat in winter and cooling in summer. As a result, commonly ignored horizontal redistributions within deciles are shown to exceed vertical redistributions between deciles. Rebates via transfers widen horizontal redistributions. Some reforms deliver net income gains to the poorest families on average, even as a majority of those poor families incur losses.
Subfields: Economics and Econometrics, Gender Studies
View Paper: https://www.semanticscholar.org/paper/f5a25ec0db991d54090ee9e082fce83f9da2fb9e
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Citations in the corpus
- The Impact of a Carbon Tax on Inequality (2019, background): “payroll tax cut nor expanded social security benefits (Cronin et al. 2017).”
- Impacts of a carbon tax across US household income groups: What are the equity-efficiency trade-offs? (2018, unknown): “(2011) and Cronin et al. (2017). 32 These results can be sensitive tomodel structure and the vintage of the data used.”
- The distributional effects of a carbon tax and its impact on fuel poverty: A microsimulation study in the French context (2019, background): “…finely tailored to account for the heterogeneity of the impact of the carbon tax, in particular to allow horizontal redistribution between rich and poor, but also vertical redistribution between households with the same income level but different levels of energy consumption (Cronin et al., 2017).”