CBO Issues New Analysis Of Carbon Tax

The nonpartisan Congressional Budget Office (CBO) released a report yesterday about the impact of a carbon tax on the U.S. economy and the environment.  According to CBO's analysis, the overall economic effect of a carbon tax would depend largely on how revenue from the tax is allocated.  For example, using the revenues to reduce the federal budget deficit would offset at least part of the tax's costs to the economy by increasing output in the long run.  On the other hand, directing revenue from a carbon tax to the people most impacted by it -- low-income households -- would not benefit the overall economy, resulting in a higher total costs.  In 2011, the CBO estimated that a carbon cap-and-trade program could raise $1.2 trillion in revenues over ten years.