Carbon Taxes and the Future of Green Tax Reform

By driving changes to the climate, carbon emissions will impose major long-term economic costs, both here in the U.S. and around the world.
Carbon taxes are an option to make the market reflect future costs of carbon emissions, discouraging emissions and incentivizing development and implementation of clean technology.
Carbon taxes also come with design challenges and economic costs, including reduced economic growth and a relatively heavy tax burden on low-income households.
The problems of a carbon tax are shared by other environmental policies, as regulation disproportionately burdens low-income people, while subsidies for green technology tend to benefit the wealthy.
The revenues from a carbon tax could be used to offset growth and distributional concerns by lowering more distortionary taxes elsewhere and providing cash payments to households.