Short Description:
A carbon tax’s effect on the economy depends on how lawmakers would use revenues generated by the tax. The tax would help reduce U.S. emissions but would have only a modest effect on the Earth’s climate without a worldwide effort.
Lawmakers could increase federal revenues and encourage reductions in emissions of carbon dioxide (CO2) by establishing a carbon tax, which would either tax those emissions directly or tax fuels that release CO2 when they are burned (fossil fuels, such as coal, oil, and natural gas). Emissions of CO2 and other greenhouse gases accumulate in the atmosphere and contribute to climate change—a long-term and potentially very costly global problem.