Dmarron.com Website Review

Carbon dividends are the hottest idea in climate policy. A diverse mix of progressive and conservative voices are backing the idea of returning carbon tax revenues to households in the form of regular “dividend” payments. So are a range of businesses and environmental groups. Two weeks ago, six House members—three Democrats and three Republicans—introduced carbon dividend Here is the idea: A robust carbon tax would cut emissions of carbon dioxide and other gases that are threatening our climate. It also would indirectly increase taxes on consumers and raise significant revenue. Carbon dividends would distribute that revenue back to households through regular payments, thus softening the financial blow of the tax while still reducing emissions. (Of course, the revenue While the premise is simple, the details of implementing carbon dividends are complex. Policymakers face a range of philosophical, political, and practical issues. In a new report, How to Design Carbon Dividends an advocate for carbon dividends (full disclosure: I am a senior research fellow with the organization). Two distinct philosophic views animate carbon dividend proposals. One sees dividends as shared income from a communal property right. Just as Alaskans share in income from the state’s oil resources, so could Americans share in income from use of atmospheric resources. The second sees dividends as a way to rebate carbon tax revenues back to the consumers who ultimately pay them. Though these ideas can be complementary, they have different implications for designing carbon dividends. The communal property view, for example, implies people should receive identical dividends that would be taxed as a new source of income. But those who see dividends as a tax rebate would link the payment to a person’s carbon tax burden and make the payment tax-free. Similar differences arise for dividend eligibility, the treatment of children, and other issues. Elaine and I show how dividends should be designed under each of these views. But we do not recommend either pure approach. Political and