Center for American Progress

RELEASE: Pricing Carbon in Context, Deconstructing Hyperbolic Arguments
Press Release

RELEASE: Pricing Carbon in Context, Deconstructing Hyperbolic Arguments

Washington, D.C. — The Center for American Progress has released an issue brief today that begins to deconstruct the hyperbolic arguments around putting a price on carbon pollution. Specifically, the brief provides context about how a price on carbon might fit into the overall federal budget and could relate to other sources of revenue and spending priorities. The brief shows that even a carbon tax that generates $1 trillion over 10 years would amount to less than 3 percent of the current federal budget.

“Economic advisers to Democratic and Republican presidents have supported putting a price on carbon. However, opponents of pricing carbon pollution often make predictions of economic disasters that are divorced from any real policy specifics,” said Greg Dotson, Vice President for Energy Policy and a co-author of the brief. “The paper we’re releasing today helps provide valuable context to policymakers about how a price on carbon might relate to other important sources of revenue and spending.”

The issue brief looked at a hypothetical carbon tax of $25 per ton of carbon emissions, with a 2 percent increase each year over a 10-year window.  During that same 10-year window, from 2017 to 2026, federal tax revenue is projected to exceed $42 trillion, with the majority of that coming from income and payroll taxes. Under this scenario, the carbon tax would yield a $1.06 trillion increase in aggregate revenue, or a 2.6 percent increase in total revenue. To add more context, the total projected mandatory expenditures over the same 10-year period is $32.6 trillion, or 30 times more than the scale of the hypothetical carbon tax.

Click here to read the issue brief.

For more information on this topic or to speak with an expert, contact Tom Caiazza at [email protected] or 202.481.7141.

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