Carbon Dividend Distribution Laser Talk

Carbon Dividend Delivery Study

To address the question of “How will you go about distributing the carbon dividend to households?”, CCL commissioned an expert study of how to optimize the carbon dividend distribution [1]. Our goal was to maximize simplicity and minimize costs for government, businesses, and households while still getting a dividend to as many households as possible.

How would the dividend be distributed?

All the money collected from fossil fuel companies goes to a Carbon Fee Trust Fund managed by an Administrator (Treasury Department or private contractor). After administrative costs, the net funds constitute the pool for carbon dividends. The general structure and infrastructure for sending dividends out are summarized in Figure 1.

There are many decisions that must be made on the details of implementation. CCL’s recommendations for these decisions are detailed in our FAQ, which we’d be happy to make available to you. However, in the end, CCL will always support decisions that maximize the number of households receiving the dividend, maximize simplicity, and minimize costs.

The expert study confirmed CCL’s view that remitting the carbon dividend directly to households is the simplest and most robust way to distribute it.

How would the recipients be determined?

Recipients are identified from existing tax records [2] or through a special form for those who haven’t filed income taxes. Most people will get their dividend as direct deposit or on an existing government-issued debit card, with paper checks as a backup. Eligibility changes are taken care of on a monthly basis, and any underpayments or overpayments for the year are reconciled on the recipient’s next income tax return.

CCL is satisfied that these steps will make the carbon dividend distribution fair, flexible, universal, and highly visible to households.

Figure 1 – Carbon Dividend Distribution

Figure 1: Summary of Steps needed in getting the dividend to as many households as possible for Dividend Distribution to Households, and whether each step is undertaken by households (gray boxes) or a government agent/contractor (white boxes).

  1. Lerman, A.H. “Paying Dividends to United States Residents with the Revenue from the Carbon Fee.” White paper commissioned by Citizens’ Climate Lobby. Dec 2015. 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.
  2. Receipt of dividend is aligned with tax filing status, e.g., a married couple filing income taxes jointly will get both of their dividends in a single payment. Parents with dependent children will get their child dividends (up to two per family) included in a combined payment.

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