The economic, climate, fiscal, power, and demographic impact of a national fee-and-dividend carbon tax

This report examines the economic, climate, budgetary, power generation, and demographic impacts of implementing a revenue-neutral carbon tax for nine regions of the United States. The carbon tax would begin in 2016 with a rate of $10 per metric ton of carbon dioxide and escalate in a linear manner at $10 per year. The point of assessment for this tax would be extraction, although, after significant pass-through of the cost from upstream producers to downstream consumers, everyone in the energy supply chain would feel the influence from the carbon tax. Every dollar—100% of proceeds—from the carbon tax would enter into a “fee-and-dividend” (F&D) system that refunds the money to all American households with checks or direct deposits on a monthly basis. Every household would receive its share based on the number of adults (over 18) living there with dependent children (under 18) counting half as much as adults (and two being the maximum). The policy would also include a border adjustment to correct for carbon leakage outside of American borders and preserve competitiveness.