A Carbon-for-Corporate Tax Swap Would Be Great for the Rich (and Possibly the Environment)

by Reihan Salam

So says Donald Marron of the Tax Policy Center:

My Tax Policy Center colleague Eric Toder and I explore that question in a new paper. We find that using a carbon tax to help pay for corporate tax reform has several attractions and one big drawback. A well-designed tax swap could combat climate change, make our corporate tax system more competitive, and reduce long-term deficits, but would be quite regressive, increasing tax burdens on most Americans while cutting them on those with the highest incomes.

I’m a carbon tax skeptic, but it must be said that Marron and Toder’s work doesn’t constitute a case against a carbon tax as such. It merely strengthens the case against one of the more politically attractive vehicles for imposing a carbon tax. 

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.