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Main Title: Environmental taxation, inequality and Engel’s law
Subtitle: the double dividend of redistribution
Author(s): Klenert, David Christian
Schwerhoff, Gregor
Edenhofer, Ottmar
Mattauch, Linus
Type: Article
Language Code: en
Is Part Of: 10.14279/depositonce-5567
Abstract: Empirical evidence shows that low-income households spend a high share of their income on pollution-intensive goods. This fuels the concern that an environmental tax reform could be regressive. We employ a framework which accounts for the distributional effect of environmental taxes and the recycling of the revenues on both households and firms to quantify changes in the optimal tax structure and the equity impacts of an environmental tax reform. We characterize when an optimal environmental tax reform does not increase inequality, even if the tax system before the reform is optimal from a non-environmental point of view. If the tax system before the reform is calibrated to stylized data—and is thus non-optimal—we find that there is a large scope for inequality reduction, even if the government is restricted in its recycling options.
Issue Date: 2016
Date Available: 18-Jan-2017
DDC Class: 330 Wirtschaft
336 Öffentliche Finanzen
Subject(s): environmental tax reform
double dividend
revenue recycling
non-homothetic preferences
Journal Title: Environmental and Resource Economics
Publisher: Springer Science + Business Media B.V.
Publisher Place: Dordrecht [u.a.]
Publisher DOI: 10.1007/s10640-016-0070-y
EISSN: 1573-1502
ISSN: 0924-6460
Appears in Collections:Inst. Landschaftsarchitektur und Umweltplanung » Publications

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