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On the Economics of a Carbon Tax for the United States
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On the Economics of a Carbon Tax for the United States

Gilbert E. Metcalf
Brookings Institution, 2019
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9

Qualities

  • Controversial
  • Analytical
  • Hot Topic

Recommendation

The Paris Agreement on climate change homes in on curbing greenhouse gases (GHGs), specifically carbon dioxide. While 27 governing districts, including nations and states, currently operate under a carbon tax architecture, the United States does not impose such a levy. Professor Gilbert E. Metcalf argues that a US carbon tax would help abate GHGs, and it would do so more effectively than a cap-and-trade scheme. Business leaders, analysts and policy experts can explore the details and effects of a US carbon tax in this informative and comprehensive report.

Take-Aways

  • A one-degree Celsius [1.8-degree Fahrenheit] increase in global temperatures would cut US GDP by 1.2%. 
  • Carbon taxes have three advantages over cap-and-trade programs: First, a tax avoids the carbon price swings that can thwart companies’ long-term plans.
  • Second, a carbon tax fits neatly into the current US system of tax collection. And third, it precludes the risk of carbon prices plunging to a point at which they make little impact on emissions.

About the Author

Gilbert E. Metcalf is an economics professor at Tufts University and a researcher at the National Bureau of Economic Research.

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