Tuesday, May 18, 2010

Who gets the revenue of auctioned carbon permits?

The Kerry-Lieberman "American Power Act," also known as the cap and trade climate bill, would initially auction only 24.8% of the carbon allowances.

The Brookings Institution has broken down who would get that revenue. Summarized:

None of the auction revenue is used to reduce high marginal tax rates on income or capital, although some revenue is used for “consumer relief,” which includes a tax credit for households above 150 percent of the poverty line, which is phased out starting at 250 percent of the poverty line. Some of the auction revenue is also used for a “universal refund,” which is a lump-sum payment made to all eligible taxpayers, adjusted for family size.

Only a small percentage of the allowance value is used for deficit reduction.

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