A carbon tax need not hurt the poor
I appreciated Floyd Freeman's letter to the editor (10/12/21) expressing his concern that a carbon tax will hurt the poor. I doubt that anybody would want to impose more financial hardship on those who are already suffering. After reviewing the three letters he mentions, I think there may be some confusion about the carbon taxes being discussed.
The writers are referring generally to a "carbon fee and dividend policy." These policies would charge oil, natural gas, and coal companies a tax at the wellhead or mine for every ton of carbon they produce. The government would then give this money back to American residents equally in monthly dividends, or "carbon cash back" checks. We would be free to spend that money as we like.
Studies show that if all of the carbon taxes collected were returned this way, lower income households would receive more money back each month than they spend in higher prices for the kinds of items that Mr. Freeman lists. The top 20% of households, however, would pay more in higher prices than they receive in dividends.
This type of policy would help, rather than hurt the poor. But there are other benefits as well. Lower income families can often afford to live only in areas that are strongly affected by climate change. These include flood prone neighborhoods, high pollution industrial areas, and urban heat islands. As heat waves and torrential rains intensify, poor families can't afford the property damages or health impacts of climate change.
A strong carbon fee and dividend policy would reduce carbon emissions faster than any other carbon pricing or regulatory approach. That, in turn, would more quickly limit the impacts on the poor of climate change in the coming decades.