TY  - JOUR
AU  - Metcalf,Gilbert E.
AU  - Paltsev,Sergey
AU  - Reilly,John
AU  - Jacoby,Henry
AU  - Holak,Jennifer F.
TI  - Analysis of U.S. Greenhouse Gas Tax Proposals
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13980
PY  - 2008
Y2  - May 2008
UR  - http://www.nber.org/papers/w13980
L1  - http://www.nber.org/papers/w13980.pdf
N1  - Author contact info:
Gilbert E. Metcalf
Room 3221
Department of the Treasury
Washington, DC 20220
1500 Pennsylvania Ave., NW
Tel: 202-622-0173
E-Mail: gilbert.metcalf@tufts.edu

Sergey Paltsev
Joint Program on the Science
and Policy of Global change
Massachusetts Institute of Technology
1 Amherst St.  (Bldg. E40)
Cambridge, MA  02139
E-Mail: paltsev@MIT.EDU

John Reilly
Joint Program on the Science
and Policy of Global Change
Massachusetts Institute of Technology
1 Amherst St.  (Bldg. E40)
Cambridge, MA  02139
E-Mail: jreilly@mit.edu

Henry Jacoby
Joint Program on the Science
and Policy of Global Change
Massachusetts Institute of Technology
1 Amherst St.  (Bldg. E40)
Cambridge, MA  02139
E-Mail: hjacoby@MIT.EDU

Jennifer F. Holak
Joint Program on the Science
and Policy of Global Change
Massachusetts Institute of Technology
1 Amherst St.  (Bldg. E40)
Cambridge, MA, 02138
E-Mail: holak@mit.edu
AB  - The U.S. Congress is considering a set of bills designed to limit the nation's greenhouse gas (GHG) emissions. This paper complements the analysis by Paltsev et al. (2007) of cap-and-trade bills and applies the MIT Emissions Prediction and Policy Analysis (EPPA) model to carry out an analysis of the tax proposals.  Several lessons emerge from this analysis. First, a low starting tax rate combined with a low rate of growth in the tax rate will not reduce emissions significantly.  Second, the costs of GHG reductions are reduced with the inclusion of non-CO2 gases in the carbon tax scheme.  Third, welfare costs of the policies can be affected by the rate of growth of the tax, even after controlling for cumulative emissions.  Fourth, a carbon tax -- like any form of carbon pricing -- is regressive. However, general equilibrium considerations suggest that the short-run measured regressivity may be overstated.  Additionally, the regressivity can be offset with a carefully designed rebate of some or all of the revenue. Finally, the carbon tax bills that have been proposed or submitted are for the most part comparable to many of the carbon cap-and-trade proposals that have been suggested.  Thus the choice between a carbon tax and cap-and-trade system can be made on the basis of considerations other than their effectiveness at reducing emissions over some control period.
ER  -