Low-Income Households Laser Talk

Question: What will a carbon fee policy mean for low-income households?

Answer: Under the Energy Innovation and Carbon Dividend Act, [1] a majority of U.S. households will end up with more money in their pockets, and low-income households typically benefit the most. [2,3,4]

Why is this? The reason is simple: low-income households typically have lower carbon footprints.   Americans in the wealthiest 20 percent of the population spends 3.6 times as many dollars on fossil energy as the least wealthy 20 percent, and thus would generate 3.6 times as many carbon fee dollars per person. [5] With that money then distributed back to households as carbon dividends, equally without regard to wealth or energy use, low-income Americans will come out ahead 90 percent of the time, simply because they consume far less energy than the wealthy. [4]

Moreover, the 2014 analysis by REMI revealed that a carbon fee and dividend policy like H.R.763 would also increase jobs, and the strongest job creation would be in occupations typically filled by low- to middle-income workers. [6]

The Energy Innovation and Carbon Dividend Act will leave low-income households better off financially and more likely to have a job, and it will do this without any costly and complicated means-testing, income group targeting, or income-based subsidization.

  1. H.R.763 The Energy Innovation and Carbon Dividend Act of 2019. Congress.gov (24 Jan 2019).
  2. Williams, R.C., et al. “The Initial Incidence of a Carbon Tax across Income Groups.” Resources for the Future (Aug 2014).
  3. Komanoff, C. “The climate solution that boosts income for over 60% of Americans – the ones who most need it.” Carbon Tax Center (15 Sep 2017).
  4. Ummel, K. “Impact of CCL’s proposed carbon fee and dividend policy: a high-resolution analysis of the financial effect on U.S. households.” Working Paper v1.3 (Feb 2016).
  5. “Ensuring Equity.” Carbon Tax Center (14 Jun 2014).
  6. Nystrom, S. and P. Luckow. “The Economic, Climate, Fiscal, Power, and Demographic Impact of a National Fee-and-Dividend Carbon Tax.” Regional Economic Models, Inc. and Synapse, Inc. (9 June 2014).

This page was last updated on 01/27/19 at 21:12 CST.

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