Working Paper: NBER ID: w13554
Authors: Kevin A. Hassett; Aparna Mathur; Gilbert E. Metcalf
Abstract: This paper measures the direct and indirect incidence of a carbon tax using current income and two measures of lifetime income to rank households. Our results suggest that carbon taxes are more regressive when annual income is used as a measure of economic welfare than when proxies for lifetime income are used. \n \nFurther, the direct component of the tax, in any given year, is significantly more regressive than the indirect component. In fact, for 1987, the indirect component of the tax is mildly progressive. We observe a modest shift over time with the direct component of carbon taxes becoming less regressive and the indirect component becoming more regressive. These effects mostly offset each other and the distribution of the total tax burden has not changed much over time. \n \nIn addition we find that regional variation has fluctuated over the years of our anlaysis. By 2003 there is little systematic variation in carbon tax burdens across regions of the country.
Keywords: Carbon Tax; Incidence Analysis; Lifetime Income; Regional Variation
JEL Codes: H23; Q48; Q54
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| carbon tax (H23) | regressivity of carbon tax (annual income) (H23) |
| carbon tax (H23) | regressivity of carbon tax (lifetime income) (H23) |
| direct component of carbon tax (H23) | regressivity (H23) |
| indirect component of carbon tax (H23) | regressivity (H23) |
| direct component of carbon tax (H23) | indirect component of carbon tax (H23) |
| time (C41) | direct component of carbon tax regressivity (H23) |
| time (C41) | indirect component of carbon tax regressivity (H23) |
| regional variation in carbon tax burdens (H23) | tax incidence (H22) |