Tax Deductions, Environmental Policy, and the “Double Dividend” Hypothesis

Parry, Ian; Bento, Antonio M.

doi:10.1006/jeem.1999.1093

Cited by 158 publications

(78 citation statements)

References 29 publications

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“…To pick just one example, Parry and Bento (2000) suggest that inefficient tax preferences within the income tax system (tax deductions, credits, and exemptions that are not justified by market failures) narrow the tax base of the income tax, and that taking this into account means that environmental taxes are more efficient at raising revenue than the income tax -and thus that the optimal environmental tax is more than marginal damage. A major problem with that argument is that it compares the existing (inefficiently designed) income tax to an efficiently designed environmental tax.…”

Section: Environmental Taxes As Part Of the Broader Tax Systemmentioning

confidence: 99%

Environmental Taxation

Williams¹

2016

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This paper examines potential environmental tax policy reforms. It focuses primarily on a carbon tax, but also more briefly considers a range of other possible changes. These include revising or eliminating various energy and environmental tax credits and deductions (many of which might become unnecessary in the presence of a carbon tax), as well as changes to energy taxes that have substantial environmental implications (such as the federal gasoline tax). The paper draws on recent theoretical and empirical research to evaluate the effects of such reforms on tax revenue, pollution emissions, economic efficiency, and income distribution.

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Section: Environmental Taxes As Part Of the Broader Tax Systemmentioning

confidence: 99%

Environmental Taxation

Williams¹

2016

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“…Roughly, the last two forms can be classified as the strong version that implies that environmental taxes will generate environmental benefits at a zero or negative cost to the economy. While the weak form has generally been supported by both theoretical and empirical work, the strong version is questioned in many studies [20][21][22][23].…”

Section: The Double Dividend From Environmental Taxesmentioning

confidence: 99%

Are Green Taxes a Good Way to Help Solve State Budget Deficits?

Zhou

Segerson

2012

Sustainability

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Abstract:States are increasingly turning to environmental taxes as a means of raising revenue. These taxes are often thought to generate a double dividend: an environmental dividend stemming from the environmental improvement, and an economic dividend resulting from use of the revenue from environmental taxes to reduce other distortionary taxes (e.g., income or sales taxes). We review the economic literature on the double-dividend hypothesis, and show explicitly that the conditions under which the second dividend exists are less likely to hold when the amount of revenue that would be raised by an optimal environmental tax is small relative to the tax revenue from other taxes. We then present estimates of the potential revenue that could be raised from two environmental taxes in Connecticut. The results suggest that, because of their small tax base, environmental taxes are likely to have limited potential to raise revenue to finance state government budget deficits and/or reduce other distortionary taxes. Overall, environmental taxes could still generate significant gains for society if they lead to significant improvements in environmental quality. However, without more evidence of the existence of a double dividend, states should not try to justify these taxes on the basis of raising revenue more efficiently.

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“…For example, according to Parry and Bento (2000), a revenue-neutral CO 2 tax of $10-$20 could create efficiency gains for society of about $20-$30 billion per year under certain modeling assumptions. The efficiency gains could vary depending on assumptions about the marginal excess burden of income taxes.…”

Section: Indirect Benefits Of Auctions and Taxesmentioning

confidence: 99%

Greenhouse Gas Auctions and Taxes: Some Political Economy Considerations

Hahn¹

2009

Review of Environmental Economics and Policy

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Tax Deductions, Environmental Policy, and the “Double Dividend” Hypothesis

Cited by 158 publications

References 29 publications

Environmental Taxation

Environmental Taxation

Are Green Taxes a Good Way to Help Solve State Budget Deficits?

Greenhouse Gas Auctions and Taxes: Some Political Economy Considerations

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