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A Tax–Based Approach to Slowing Global Climate Change

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  • Aldy, Joseph E.
  • Ley, Eduardo
  • Parry, Ian

Abstract

This paper discusses the design of CO2 taxes at the domestic and international level and the choice of taxes versus cap and trade. There is a strong case for taxes on uncertainty, fiscal, and distributional grounds, though this critically hinges on policy specifics and how revenues are used. The efficient near–term tax is at least $5–$20 per ton of CO2 and the tax should be imposed upstream with incentives for downstream sequestration and abatement of other greenhouse gases. At the international level, a key challenge is the possibility that emissions taxes might be undermined through offsetting changes in other energy policies.

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Bibliographic Info

Article provided by National Tax Association in its journal National Tax Journal.

Volume (Year): 61 (2008)
Issue (Month): 3 (September)
Pages: 493-517

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Handle: RePEc:ntj:journl:v:61:y:2008:i:3:p:493-517

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References

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  1. Parry, Ian & Small, Kenneth, 2002. "Does Britain or the United States Have the Right Gasoline Tax?," Discussion Papers, Resources For the Future dp-02-12-, Resources For the Future.
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Citations

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Cited by:
  1. Devarajan, Shantayanan & Go, Delfin S. & Robinson, Sherman & Thierfelder, Karen, 2009. "Tax policy to reduce carbon emissions in south Africa," Policy Research Working Paper Series, The World Bank 4933, The World Bank.
  2. Santos, Georgina & Behrendt, Hannah & Maconi, Laura & Shirvani, Tara & Teytelboym, Alexander, 2010. "Part I: Externalities and economic policies in road transport," Research in Transportation Economics, Elsevier, Elsevier, vol. 28(1), pages 2-45.
  3. repec:wbk:wboper:3022 is not listed on IDEAS
  4. Fischer, Carolyn & Springborn, Michael, 2011. "Emissions targets and the real business cycle: Intensity targets versus caps or taxes," Journal of Environmental Economics and Management, Elsevier, vol. 62(3), pages 352-366.
  5. Rohling, Moritz & Ohndorf, Markus, 2012. "Prices vs. Quantities with fiscal cushioning," Resource and Energy Economics, Elsevier, Elsevier, vol. 34(2), pages 169-187.
  6. Wojciech Kopczuk & Justin Marion & Erich Muehlegger & Joel Slemrod, 2013. "Do the Laws of Tax Incidence Hold? Point of Collection and the Pass-through of State Diesel Taxes," NBER Working Papers 19410, National Bureau of Economic Research, Inc.
  7. Eduardo, Ley & Jessica, Boccardo, 2009. "The Taxation of Motor Fuel: International Comparison," MPRA Paper 19461, University Library of Munich, Germany.
  8. Augusto de la Torre & Pablo Fajnzylber & John Nash, 2009. "Low Carbon, High Growth : Latin American Responses to Climate Change - An Overview," World Bank Publications, The World Bank, number 3022, August.
  9. Pope, Jeff & Owen, Anthony D., 2009. "Emission trading schemes: potential revenue effects, compliance costs and overall tax policy issues," Energy Policy, Elsevier, Elsevier, vol. 37(11), pages 4595-4603, November.

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