A new study from REMI finds that a revenue neutral carbon tax could create 2.8 million jobs, increase GDP by $1.3 trillion
A revenue-neutral carbon tax or fee is a proposed policy to address global warming that's become increasingly popular, particularly in the US. It's a simple concept put a much needed price on carbon pollution, but return all the revenue that's generated to taxpayers (for example with a monthly refund) to offset rising energy costs. This approach appeals to political conservatives, because it's a free market solution that doesn't increase the size of government.
British Columbia (BC) launched a revenue-neutral carbon fee in 2008, with the tax offset through a matching reduction income taxes. So far it's been very successful, decreasing carbon pollution while the BC economy performed just as well as the rest of Canada's. The carbon tax has 64% support among BC voters.
Personal income per capita goes up because households receive the total benefit of the dividend as well as improved job opportunities and wages in the general economy, which more than counteracts any negative effects from higher energy and commodity prices.
GDP goes up because the fee and dividend provides a boost to consumer spending, reducing demand for fossil fuels does not have a significant impact on American employment and reduces energy imports from abroad, and the border adjustment means American firms are on a level playing field when it comes to competing on the world market.
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