Dividend Delivery

Delivering Carbon Cash to Households

Laser Talk

Question:  How can carbon cashback payments be efficiently delivered to households?

Answer:  The carbon cashback payment is one of the three legs of a carbon dividend policy such as that illustrated in H.R.2307, the Energy Innovation and Carbon Dividend Act, [1] so it’s important to get it right. CCL previously commissioned an expert study to dive deeply into how this would be done. [2] Our goal was to learn how to minimize administrative cost and make it work smoothly for everyone involved, while still getting the money to as many households as possible.

The expert study confirmed that remitting carbon cashback payments (also referred to as ‘carbon dividends’) directly to households is, as CCL had anticipated, the least costly and least burdensome way to recycle the revenue to consumers.

In this study, all the fees collected from fossil fuel suppliers go into a fund administered by the Treasury Department. All of that money, after administrative overhead, is then distributed to U.S. residents, who are identified from existing tax records or through a special form submitted by those who haven’t filed income taxes.

Most recipients would get their carbon cashback payments in the form of a direct bank deposit or as money added to an existing government-issued debit card, with paper checks as a backup. Eligibility changes – births, deaths, adoptions, age changes – would be taken care of on a monthly basis, and any discrepancies between the money they are entitled to and what they have received would be reconciled on the next income tax return.

CCL is satisfied that these steps would make the carbon cashback delivery fair, flexible, and highly visible to households.

For more details, refer to the Working Paper or accompanying FAQ. Note that this paper was written prior to introduction of the Energy Innovation and Carbon Dividend Act, so there are some minor policy differences.

In a Nutshell: Carbon cashback payments, or carbon dividends, can   be efficiently sent to American households as direct bank deposits, debit card transfers, or paper checks. CCL commissioned a study which developed detailed forms and procedures that minimize administrative cost for this essential component of a carbon fee and dividend plan.

  1. “H.R.2307 – Energy Innovation and Carbon Dividend Act of 2021.” Library of Congress (01 Apr 2021).
  2. Lerman, A.H. “Paying Dividends From Carbon Fee Revenue To American Residents.” Working Paper commissioned by CCL (updated May 2018). Mr. Lerman was an economist in of the Office of Tax Analysis at the Treasury Department who analyzed, developed, and recommended tax policies. He has provided expert advice to policymakers, working on every major tax reform legislation and administrative reform since 1971.

This page was last updated on 10/24/21 at 23:15 CDT.