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A Distributional Analysis of Green Tax Reforms

Metcalf, Gilbert E.


I measure the distributional impact of a shift toward greater reliance on environmental taxes (a green tax reform) using both annual and lifetime income measures to rank households. An environmental tax reform can be designed that has a negligible impact on the income distribution when the funds are rebated to households through reductions in the payroll tax and personal income tax. I also analyze trade-offs among competing goals of efficiency, equity, and ease of administration in the design of a green tax reform.


Metcalf, Gilbert E. (1999), A Distributional Analysis of Green Tax Reforms, National Tax Journal, 52:4, pp. 655-82