Carbon Taxes and Dividends Are Different From Regular Price Hikes

Carbon taxes and dividends do not reduce disposable incomes.

Click here to read.

Does the freakout over recent gas price hikes show how bad a carbon tax would be politically speaking? Not at all. Carbon taxes increase prices but then provide offsetting “dividend” payments to households. It thus has the positive incentive effects of high gas prices without the negative income effect of high gas prices.