The Incidence of a U.S. Carbon Tax: A Lifetime and Regional Analysis

Kevin A. Hassett, Aparna Mathur, Gilbert E. Metcalf

NBER Working Paper No. 13554
Issued in October 2007, Revised in November 2007
NBER Program(s):Environment and Energy Economics, Public Economics

This paper measures the direct and indirect incidence of a carbon tax using current income and two measures of lifetime income to rank households. Our results suggest that carbon taxes are more regressive when annual income is used as a measure of economic welfare than when proxies for lifetime income are used.

Further, the direct component of the tax, in any given year, is significantly more regressive than the indirect component. In fact, for 1987, the indirect component of the tax is mildly progressive. We observe a modest shift over time with the direct component of carbon taxes becoming less regressive and the indirect component becoming more regressive. These effects mostly offset each other and the distribution of the total tax burden has not changed much over time.

In addition we find that regional variation has fluctuated over the years of our anlaysis. By 2003 there is little systematic variation in carbon tax burdens across regions of the country.

download in pdf format
   (141 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w13554

Published: Kevin A. Hassett & Aparna Mathur & Gilbert E. Metcalf, 2009. "The Incidence of a U.S. Carbon Tax: A Lifetime and Regional Analysis," The Energy Journal, International Association for Energy Economics, vol. 30(2), pages 155-178. citation courtesy of

Users who downloaded this paper also downloaded* these:
Grainger and Kolstad w15239 Who Pays a Price on Carbon?
Metcalf w15054 Tax Policies for Low-Carbon Technologies
Fullerton and Metcalf w8829 Tax Incidence
Davis and Kilian w14685 Estimating the Effect of a Gasoline Tax on Carbon Emissions
Poterba w3649 Tax Policy to Combat Global Warming: On Designing a Carbon Tax
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us