While carbon pricing, in general, and carbon taxes, in particular, are popular with economists, they are subject to considerable misunderstanding among policymakers and the public. In this paper I consider and refute five myths about carbon taxes: 1) that a carbon price will hurt economic growth; 2) that carbon pricing will kill jobs; 3) that a carbon tax and cap and trade program have the same economic impacts; 4) that we can’t achieve carbon reduction targets with a carbon tax, and 5) that carbon pricing is regressive. I then discuss implications for policy making.
Keywords: Climate Change, Carbon Pricing, Carbon Tax, Distribution, Economic Growth
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Sustainable Development Goals
CEEPR WP 2022-016