Revenues from Carbon Pricing: Why Their Use is, in Essence, Funded by a Capitation Tax
Global Energy Policy Center Research Paper No. 09-01
10 Pages Posted: 19 Dec 2008 Last revised: 26 May 2014
Date Written: January 2, 2009
Abstract
Cap-and-trade and carbon-tax policies generate streams of tax revenue or of valuable allowances, which represent the value of using the atmosphere for storing carbon emissions. The common ownership of the atmospheric commons suggests equal ownership of the value stream it provides. If equal ownership is granted, governmental appropriation of carbon revenues becomes an equal-dollar-per-person (capitation) tax. The social norm against capitation taxes allows comparison of carbon-tax and cap-and-trade policies with their "equitable" counterparts that mimic equal ownership. Both the "green employment tax swap" proposed by Gilbert E. Metcalf and the U.S. cap-and-trade system proposed by Robert N. Stavins are found to compare unfavorably with equitable policies.
Keywords: carbon tax, cap and trade, carbon tax swap, capitation tax, climate change, global warming, energy policy
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