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How to make a carbon tax reform progressive: The role of subsistence consumption

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  • Klenert, David
  • Mattauch, Linus

Abstract

This letter analyzes the distributional effects of a carbon tax reform when households must consume carbon-intensive goods above a subsistence level. The reform is progressive if revenues are recycled as uniform lump-sum transfers, in other cases it is regressive.

Suggested Citation

  • Klenert, David & Mattauch, Linus, 2016. "How to make a carbon tax reform progressive: The role of subsistence consumption," Economics Letters, Elsevier, vol. 138(C), pages 100-103.
    • Handle: RePEc:eee:ecolet:v:138:y:2016:i:c:p:100-103
    DOI: 10.1016/j.econlet.2015.11.019
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    More about this item

    Keywords

    Carbon tax reform; Distribution; Revenue recycling; Inequality; Non-homothetic preferences;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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