How to Make a Carbon Tax Reform Progresive: The role of subsistence consumption

Authors :
David Klenert, Linus Mattauch
Organisation:
Mercator Research Institute on Global Commons and Climate Change (MCC)

This letter analyzes the distributional effects of a carbon tax reform when households must consume carbon-intensive goods above a subsistence level. The reform is progressive if revenues are recycled as uniform lump-sum transfers, in other cases it is regressive.