The Economist - World News, Politics

Economics : 1
Impact of carbon tax on the United States
Carbon tax is a fee, which government charges on organisation that burn fossil fuels. Most
widely discussed criteria includes oil, natural gas, gasoline, and coal on which there is
imposition of carbon tax. Carbon related fuels lead to the emission of greenhouse gases.
Carbon tax aims to price carbon, which will reduce the amount of carbon emissions in
atmosphere and also mitigate its impact of climate changes. On the other hand, type of
revenue neutral carbon tax, which have modest impact on economy especially GDP (Gross
domestic product) (Dong et al., 2017). This tax is known as Pigouvian tax where market
transaction creates negative externality. Negative externality exacts direct costs, which were
not the part of first transaction regarding tax. The gases include methane, and Co2 that
creates global warming by heating atmosphere. The resultant of climate disruption can cause
extreme weather that includes heat waves, droughts, blizzards, and flooding (Dong et al.,
2017).
This tax has high influence on companies as it reduces the emissions in two ways. Foremost,
cost of carbon-based fuels can motivate the organisation to include clean energy kin its
operations. Carbon tax will include the increasing price of electricity and gasoline. Customers
will become energy efficient by reducing emission of greenhouse gases (Pereira, Pereira, &
Rodrigues, 2016).
The carbon tax is necessary for how it would affect the economy
As far as the impact on economy is concerned, carbon tax will increase the price of
electricity, and gasoline. Consumers will become more efficient and it will reduce greenhouse
gas emissions. The government will have to determine the external cost for every ton of
greenhouse gases. The economy will be benefited by the government subsidies towards coal,
gas, and oil organisation (Wang, Wang, & Huang, 2017). The economic impact of carbon tax