Paul L. Caron

Tuesday, December 23, 2008

A Tax–Based Approach to Slowing Global Climate Change

Joseph E. Aldy (Resources for the Future, Washington, D.C.), Eduardo Ley (The World Bank, Washington, D.C.) & Ian Parry (Resources for the Future, Washington, D.C.) have published A Tax–Based Approach to Slowing Global Climate Change, 61 Nat'l Tax J. 493 (2008).  Here is the abstract:

This paper discusses the design of CO2 taxes at the domestic and international level and the choice of taxes versus cap and trade. There is a strong case for taxes on uncertainty, fiscal, and distributional grounds, though this critically hinges on policy specifics and how revenues are used. The efficient near–term tax is at least $5–$20 per ton of CO2 and the tax should be imposed upstream with incentives for downstream sequestration and abatement of other greenhouse gases. At the international level, a key challenge is the possibility that emissions taxes might be undermined through offsetting changes in other energy policies.

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