Carbon taxes need a good story for what happens to the tax revenue. Most of the time, advocates want to siphon the revenue into their pet cause, or pay off priv

Carbon taxes need a good story for what happens to the tax revenue. Most of the time, advocates want to siphon the revenue into their pet cause, or pay off private interests. This makes an already bitter pill dead on arrival. I usually figure a simple carbon dividend might be a more effective pitch. If you produce an average amount of carbon, you pay $x in tax and get a refund of $x. If you produce more, you come out negative, and if you produce less you make money on net. So, the clear incentive is to use less than your peers in an eventual race to the bottom. (One risk is poor folks might actually produce more carbon than the middle class, with older vehicles in disrepair and poorly insulated homes) At the end of the day though, consent of the public is what will move the needle. Carbon taxes might be Pareto Efficient and popular with economists, but if the public just hates all new taxes and won’t go for it, it’s right in theory but wrong in practice.