How to make a carbon tax insanely popular

Thursday, May 4, 2017
The Week

"A lot of time people posit the environment against the poor, saying curtailing emissions will particularly hurt the poor," Paul [Postdoctoral Associate at the Samuel DuBois Cook Center on Social Equity] told The Week in an interview. "And they're right. But through proper policy design we can really address that."

One thing worth mentioning is that the economic model Fremstad and Paul used to calculate this — called an "input-output" model — has strengths and weaknesses. It provides a very granular look at distributive impacts, but it also only gives a snapshot in time. It doesn't say how the economy will evolve over years.

There's a good argument that this is the right way to look at it. A lot of other modeling approaches will tell you how the overall economy would evolve under a carbon tax, but they can't give you that granular detail. So policymakers get excited when a carbon tax offset by other tax cuts creates more aggregate growth. But they don't grapple with the distribution of impacts within the aggregate.

Most voters, meanwhile, are probably going to be most concerned with how a carbon tax immediately affect them rather than with whether the overall economy will grow years down the line.

So what to take from this?

Read the full article here