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
NBER Program(s):   EEE   PE

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.

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This paper was revised on November 28, 2007

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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

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