Can a carbon tax cut emissions without hurting the poor?
Yes
Critics sometimes note that carbon taxes may be regressive in nature, disproportionately harming the poor by raising prices. However, carbon taxes generate revenues that could be redistributed to low-income households in the form of a carbon-tax dividend, offsetting the negative effects of price increases. Revenues could also be used to fund green energy investments and provide transitional relief to oil and gas workers. Research suggests that oil and gas companies would absorb some of the increased costs from a carbon tax, mitigating the price increases facing consumers.
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