Carbon taxes could save the planet by reducing greenhouses gases that cause global warming. But there’s a debate over what to do with the money raised. A study released Friday concludes that the “cap and dividend” approach championed by Maryland Democratic Representative Chris Van Hollen—rebating the money in lump sums to every U.S. resident—would benefit the most households but also be the most expensive.
The study (pdf) by economists at Resources for the Future, a think tank in Washington, evaluates the lump-sum rebate against two other approaches: using the tax revenue to cut taxes on capital, such as dividends and capital gains taxes, and using it to cut taxes on labor, such as taxes on wages, salaries, and bonuses.
