Fair carbon tax hinges on how refunds would be distributed
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Steven Chu (“Making a fair deal on carbon,” Opinion, Jan. 15) correctly identifies a carbon tax as a powerful way to lower CO2 emissions. Just like a plumber grabbing the right wrench from the toolbox, the government should use this tool to set our economy on a path to cleaner energy.
But fairness must be a key criterion in designing a revenue-neutral tax. Noting that refunds must be progressive, Chu advocates reducing payroll taxes. That's not really a solution for seniors and low-income residents, who don't have paychecks but still have to put fuel in their cars and heat their homes.
A more equitable approach would be to refund at least a portion of the carbon tax revenue as direct payments. Individuals would all receive the same rebate, and businesses would receive rebates per employee. Everyone who is paying the tax would get a refund, and those who pollute the least would get back more than they pay. The proposed carbon pricing bill for Massachusetts, now in committee, uses this approach.
The thorny details matter. Getting a carbon tax in place soon is urgent. Making it fair is critical.