Tax fossil fuels to cut emissions and fund climate initiatives.
Pros:
- It sends a clear price signal to reduce greenhouse-gas output.
- It spurs clean-energy investment and innovation.
- It generates predictable revenue for climate mitigation and rebates.
Cons:
- It can be regressive without targeted rebates for low-income households.
- It faces steep political challenges as a new federal tax.
- It risks “carbon leakage” if industries relocate abroad.
Conclusion: A carbon tax is market-efficient but demands equity safeguards and political will.
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