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Review of Environmental Economics and Policy Advance Access first published online on November 6, 2008
This version published online on January 6, 2009
Review of Environmental Economics and Policy, doi:10.1093/reep/ren015
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© The Author 2008. Published by Oxford University Press on behalf of the Association of Environmental and Resource Economists. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org

Designing a Carbon Tax to Reduce U.S. Greenhouse Gas Emissions

Gilbert E. Metcalf*

* Department of Economics, Tufts University; E-mail: gmetcalf@tufts.edu.

The first 150 words of the full text of this article appear below.


   Introduction
 
Public sentiment and political opinion have recently shifted dramatically in favor of the United States taking action on climate change. As illustration, the Democratic and Republican nominees for presidency last year supported imposing limits on U.S. carbon emissions. This would complement European actions on carbon emissions through the European Union's (EU) Emission Trading Scheme (ETS), which recently finished the first year of its second phase of emission limits. With the United States poised to take the major policy step of initiating limits on carbon emissions, this article, which is part of a broader symposium on Alternative U.S. Climate Policy Instruments,1 makes the economic and political case for using a carbon tax as the policy instrument for curtailing domestic greenhouse gas (GHG) emissions.

Conventional wisdom holds that a carbon tax is not a politically viable option for controlling carbon emissions because the tax makes overly explicit the costs associated with controlling . . . [Full Text of this Article]


   A Revenue and Distributionally Neutral Carbon Tax Proposal
 
The Carbon Tax
Administrative Issues
An Offsetting Income Tax Cut
Additional Components of a Comprehensive Carbon Policy

   Distributional Analysis of the Carbon Tax Proposal
 
Price Impacts
Impacts on Household Income
Geographic Impacts
Applications to a Cap-and-Trade System
Efficiency Implications

   Advantages of a Carbon Tax
 
Revenue
Administration
Efficiency in the Face of Uncertainty
Price Volatility

   A Response to Criticisms of a Carbon Tax
 
Tax Base Stability
No Binding Cap on Emissions
Tipping Points
Efficiency and Political Expediency
Interactions with International Systems

   Conclusion
 

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