Taxing Carbon to Finance Tax Reform

The document proposes a federal carbon tax on the carbon content of oil, coal, and natural gas as an efficient fiscal tool for the United States. It suggests that such a tax would be easy to administer, covering 82 percent of U.S. greenhouse gas emissions by targeting approximately 2,000 entities. The brief highlights the potential for significant revenue generation—citing a CBO estimate of $208 billion over ten years from a tax rising from $12 to $17 per metric ton—which could be used to offset inefficient taxes on labor and investment. Ultimately, the authors argue that a gradual, market-based federal tax would provide the necessary incentives to reduce emissions and improve long-term energy security with minimal economic disruption.

• A carbon tax is an efficient consumption tax on the carbon content of oil, coal, and natural gas that is relatively simple to administer. By collecting the tax at entry points like ports and refineries, the U.S. could cover 82 percent of its greenhouse gas emissions by taxing as few as 2,000 entities.
• Implementing a carbon tax would generate substantial federal revenue that could be used to fund revenue-neutral tax reform, specifically by reducing existing inefficient taxes on investment and productive labor. The Congressional Budget Office estimates that a tax starting at $12 per metric ton and rising to $17 per metric ton would produce $208 billion in revenue over ten years.
• A federal, economy-wide, market-based carbon tax is presented as the most effective climate policy for the United States. A predictable, gradual increase in the tax rate would incentivize emission reductions across the economy while improving long-term energy security and minimizing disruption.

APA

World Resources Institute (n.d.). Taxing Carbon to Finance Tax Reform. https://www.wri.org/research/taxing-carbon-finance-tax-reform

Chicago

World Resources Institute. Taxing Carbon to Finance Tax Reform. n.d. https://www.wri.org/research/taxing-carbon-finance-tax-reform.

Wikipedia

{{cite report |author=World Resources Institute |title=Taxing Carbon to Finance Tax Reform |url=https://www.wri.org/research/taxing-carbon-finance-tax-reform |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldresourcesinstitutendtaxing, author = {{World Resources Institute}}, title = {{Taxing Carbon to Finance Tax Reform}}, institution = {World Resources Institute}, url = {https://www.wri.org/research/taxing-carbon-finance-tax-reform}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }