Policy Analysis

Resources from the Alliance for Market Solutions

Carbon Regulations vs. a Carbon Tax: A comparison of the macroeconomic impacts

By Ernst & Young for the Alliance for Market Solutions
Robert J. Carroll, et al.

This report compares the macroeconomic costs of achieving a given reduction in carbon pollution through regulations versus a carbon tax. It also analyzes the macroeconomic impact of using the revenue derived from a carbon tax for one of three things: making the recent tax cuts permanent, infrastructure investment, or a dividend.

Carbon Tax Policy: A Conservative Dialogue on Pro-Growth Opportunities

Edited by Alex M. Brill for the Alliance for Market Solutions
Contributors: Kristen Soltis Anderson, Robert J. Carroll, John D. Graham, Aparna Mathur, Phillip Swagel, Alan D. Viard

This book addresses how a revenue-neutral carbon tax offers a pro-growth alternative that is more efficient than the existing regulatory regime. It brings together conservative experts to answer practical and theoretical questions. To purchase a copy of this book, click here.

Comparing the Economic Impact of an Expansion of Regulatory CO2 Controls to a Revenue-Neutral, Emissions-Equivalent Carbon Tax

By Ernst & Young for the Alliance for Market Solutions
Robert J. Carroll, et al.

This report compares the economic impact of the Obama administration’s expansion of the rules and regulations for controlling CO2 emissions to a market-based alternative in the form of a revenue-neutral, emissions-equivalent carbon tax.

Pro-Growth Carbon Tax Policy 101

By Ted Gayer and Phillip Swagel

This summary provides a primer on how a carbon tax works.

Other Resources

American Action Forum
Tax Reform Initiative Group: Briefing Book
March 2017

Douglas Hotlz-Eakin, Gordon Gray, Kimberly VanWhye, Anne Krueger, Aparna Mathur, Irwin Stelzer

“The TRIG focused on strategies to reduce the [corporate] tax rate to an internationally competitive rate of roughly 20 percent. TRIG developed a consensus “20/20” proposal for tax reform. Having concluded that politically feasible base-broadening would not be sufficient to achieve its target tax rate, TRIG considered additional revenue sources. Under this proposal, a $20 per ton tax on carbon (increasing by 5 percent annually) would pay for reducing the corporate income tax to a statutory rate of 20 percent (approximately, and down from 35).”

Office of Tax Analysis – U.S. Department of the Treasury
Methodology for Analyzing a Carbon Tax
January 2017

John Horowitz, Julie-Anne Cronin, Hannah Hawkins, Laura Konda, and Alex Yuskavage

“The purpose of this technical paper is to document the methodology OTA would use to estimate the revenue and distributional effects of a carbon tax. Carbon taxes have been sufficiently widely discussed that a technical assessment of the issues involved was warranted. In addition to describing the office’s methodology, this technical paper lays out several of the tax policy issues that would be involved in implementing such a tax.”

R Street Institute
Swapping the Corporate Income Tax For a Price on Carbon
December 2016

Catrina Rorke, Andrew Moylan and Daniel Semelsberger

“The corporate income tax and domestic carbon policy are two areas of concern in dire need of reform … there is a way to pair these two policy areas to yield an economically optimal tradeoff: an orchestrated swap of existing taxes on stuff we like for new taxes on stuff we don’t.”

R Street Institute
A Carbon Bargain for Conservatives
September 2016

Catrina Rorke

“It’s time for carbon policy that ignites, rather than restrains, the power of markets … a properly designed revenue-neutral price on carbon would create the impetus to shrink the size of government at a time when it has been growing perpetually.”

U.S. Congress Joint Committee on Taxation
Present Law and Analysis of Energy-Related Tax Expenditures
June 2016

“One approach is to control pollution directly through regulation of polluters. Other more market oriented approaches to achieving socially optimal levels of pollution control are also possible. One such approach is to set a tax on the polluting activity that is equal to the social cost of the pollution.”

Niskanen Center
The Conservative Case for a Carbon Tax
March 2015

Jerry Taylor

“Costly and economically inefficient command-and-control greenhouse gas regulations are firmly entrenched in law, and there is no plausible scenario in which they can be removed by conservative political force. Even were that not the case, the risks imposed by climate change are real, and a policy of ignoring those risks and hoping for the best is inconsistent with risk management practices conservatives embrace in other, non-climate contexts. Conservatives should embrace a carbon tax (a much less costly means of reducing greenhouse gas emissions) in return for elimination of EPA regulatory authority over greenhouse gas emissions, abolition of green energy subsidies and regulatory mandates, and offsetting tax cuts to provide for revenue neutrality.”

Download PDF