Dominic: I get where you are coming from, and this is a frequent question people raise. Three points:

  1. Essentially all carbon tax proposals I have seen do include a phase-in
  2. Don’t look just at the tax, but also what happens to the proceeds. If the proceeds are used to pay citizen dividends, or (in the tax-neutral version) to cut rates of regressive rates like payroll taxes, lower-income groups come out ahead.
  3. A few years ago I wrote some other reasons why “helping the planet” and “hurting the poor” should not be in conflict in this post (which I guess maybe I should update): http://dolanecon.blogspot.com/2013/07/why-progressives-should-love-carbon.html

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Economist, Senior Fellow at Niskanen Center, Yale Ph.D. Interests include environment, health care policy, social safety net, economic freedom.

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