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Comparing the Trade-offs of Carbon Taxes and Corporate Income Taxes

President Biden’s choice to fund new spending programs with increased corporate taxes comes with trade-offs for American output and incomes. Our new book, Options for Reforming America’s Tax Code 2.0, compares the corporate tax increase with 36 other ways lawmakers could raise revenue. Throughout the Options book it is apparent that some tax changes are […]

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Excise Tax Application and Trends

Table of Contents Key Points: In 2019, excise taxes accounted for less than 3 percent of total federal tax collections while state excise taxes on tobacco, alcohol, and motor fuel accounted for about 7 percent of total state tax revenue Taxes levied on a transaction or good that creates a negative externality or additional costs […]

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Wyden’s Energy Tax Proposal a Mixed Bag

With the $1.9 trillion American Rescue Act package signed into law, lawmakers are looking for the next issue to tackle. As the Biden administration turns toward infrastructure, Sen. Ron Wyden (D-OR) has suggested including reforms to the way the tax code subsidizes energy production in such a package. Wyden introduced the Clean Energy for America […]

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Using Carbon Tax Revenue to Grow the Economy

The Biden administration has made climate change one of the core challenges it plans to address over the next four years. One climate policy lawmakers have debated—and will likely continue to do—is a carbon tax. At the same time, the new Administration will have to tackle the severe, and likely continuing, economic fallout of the […]

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Carbon Taxes in Europe

In recent years, several countries have taken measures to reduce carbon emissions using environmental regulations, emissions trading systems (ETS), and carbon taxes. In 1990, Finland was the world’s first country to introduce a carbon tax. Since then, 16 European countries have followed, implementing carbon taxes that range from less than €1 per metric ton of […]

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A Carbon Tax to Make the TCJA’s Individual Provisions Permanent

Key Findings At the end of 2025, most individual income tax provisions of the Tax Cuts and Jobs Act (TCJA) will expire, increasing taxes on individuals. Making these provisions permanent is estimated to reduce federal tax revenues by $176 billion annually (in 2021 dollars). While making these provisions permanent would increase the long-run size of […]

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Looking Back on 30 Years of Carbon Taxes in Sweden

Key Findings Implemented in 1991, Sweden’s carbon tax was one of the first in the world, second only to Finland’s carbon tax, which was implemented a year earlier. Sweden levies the highest carbon tax rate in the world, at SEK 1,190 (US $126) per metric ton of CO2. The tax is primarily levied on fossil […]

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New Research on the Impact of Energy Taxes and the EU’s Cap-and-Trade System

New research on the impact of energy taxes and the EU’s cap-and-trade system has been released. Both articles were published by the American Economic Journal in 2020. In “Energy Cost Pass-Through in US Manufacturing: Estimates and Implications for Carbon Taxes,” the authors study the welfare effects of changes in energy input costs—such as energy tax […]