The Incidence of a U.S. Carbon Tax: A Lifetime and Regional Analysis

42 Pages Posted: 31 Oct 2007 Last revised: 3 Dec 2013

See all articles by Kevin A. Hassett

Kevin A. Hassett

American Enterprise Institute (AEI)

Aparna Mathur

American Enterprise Institute (AEI)

Gilbert E. Metcalf

Tufts University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: October 2007

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. Further, 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. In 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.

Suggested Citation

Hassett, Kevin A. and Mathur, Aparna and Metcalf, Gilbert E., The Incidence of a U.S. Carbon Tax: A Lifetime and Regional Analysis (October 2007). NBER Working Paper No. w13554. Available at SSRN: https://ssrn.com/abstract=1024970

Kevin A. Hassett

American Enterprise Institute (AEI) ( email )

1150 17th Street, N.W.
Washington, DC 20036
United States
202.862.7157 (Phone)
202.862.7177 (Fax)

Aparna Mathur

American Enterprise Institute (AEI) ( email )

1150 17th Street, N.W.
Washington, DC 20036
United States
202-868-6026 (Phone)

HOME PAGE: http://www.aei.org/scholar/aparna-mathur/

Gilbert E. Metcalf (Contact Author)

Tufts University - Department of Economics ( email )

Medford, MA 02155
United States
617-627-3685 (Phone)
617-627-3917 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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