Percent Change in Poverty after a Carbon Tax and Dividend
A carbon tax, while a popular policy proposal, is highly regressive. Pairing a carbon tax with a universal dividend—a cash benefit to all citizens—makes the policy more politically and socially viable. However, decisions on who to include as the dividend beneficiaries—and whether or not children count—affect poverty rates. We find that providing carbon dividends to all adults and children would reduce adult poverty and child poverty. However, limiting carbon dividends to adults only would increase child poverty. If children are not counted, many working class families would be taxed into poverty.