A variety of solutions to climate change are being considered by policymakers, businesses, organizations, and citizens alike. Among these solutions is a carbon tax, which is supported widely by economists and, more recently, a cohort of business leaders. But, like most of the solutions to address climate change, there remains questions about what exactly a carbon tax is and how it works. Below are common myths we hear and read about a carbon tax versus the facts (according to research conducted by the Alliance for Market Solution).
| MYTH | FACT |
| A carbon tax cannot achieve a substantial reduction in carbon emissions. |
A properly designed carbon tax can not only reduce emissions at the same rate as current solutions, such as regulations and subsidies, but it can do so at a lower cost to our economy. |
| A carbon tax would hurt the economy, including the average household. |
Using a carbon tax to reduce carbon pollution, in lieu of regulations proposed by the Obama administration, would increase annual gross domestic product by $1,170–5,090 per household in the long run. |
| Technology innovation is a more effective solution than a carbon tax. |
Technological innovation is necessary to reduce carbon pollution, and a carbon tax is the most effective tool for encouraging the development of new, cleaner technologies and more energy-efficient strategies across our economy. Replacing existing regulations and subsidies with a carbon tax would broadly stimulate a wide-range of innovation across the energy sector without the command-and-control effect of government regulations. |
| Cap-and-trade policies would be more effective than a carbon tax. |
Not only is a carbon tax easier to implement than cap-and-trade, but it also can achieve the same level of reduction in carbon emissions at a lower cost. |
| A carbon tax would put the U.S. at a disadvantage in international trade. |
A properly designed carbon tax would include a border adjustment mechanism that is consistent with U.S. trade obligations and preserves the country’s competitiveness. |
| Republicans would never support a carbon tax. | Republican Congressmen Carlos Curbelo (FL), Brian Fitzpatrick (PA), and Francis Rooney (FL) introduced carbon tax legislation in the 115th Congress, after which three Republican Congressman co-sponsored the first bipartisan legislation. |