On this page: Dividends | Fee and Dividend | Cap and Dividend | Cap and Trade|
Cap & Trade or Carbon Tax? | Previous attempts at federal carbon pricing |
State and Regional carbon pricing including California | Non-Dividend Proposals |
News and Blog articles |
Academic articles and studies
Dividends are a method of returning revenues from a carbon price back to people.
The ideas and principles behind the dividend are described in Peter Barnes' books Who Owns the Sky? and Capitalism 3.0. Also see the resources on this page below.
Two approaches to carbon pricing with dividends are 1) Fee and Dividend and 2) Cap and Dividend.
Dividend supporters come from across the political spectrum.
Conservatives like dividends as a way to make a carbon price potentially revenue-neutral. Dividends can also protect individuals from feeling the direct impacts of a tax. Dividends level the playing field and avoid funding more government programs.
Liberals like how dividends reduce the regressivity (disproportionate impact on low-income families) of a carbon fee.
Independents like how dividends are a way to make polluters pay for their impact on the atmosphere, a Commons we all share.
Why Dividends for America?
The formation of this group was inspired by a report by Harvard Professor Theda Skocpol in January 2013 called Naming the Problem, where she discusses the challenges of passing national climate legislation. She looks to the health care issue as an example of a broad coalition that was successful in passing a health care law, and especially the group Health Care for America Now.
The analysis that led to the formation of Dividends for America is that dividends are a key component to broaden the coalition that would support a carbon price. This coalition will build upon previous organizing efforts around Cap & Dividend and Fee & Dividend, and reach out to new constituencies about the importance of dividends as part of a carbon pricing system.
On page 123 of the Naming the Problem report, Skocpol concludes: "For inside the Beltway types, the easy choice will be to try ever more insider efforts to get a cap and trade system or carbon taxes, with new revenues to be dispensed in relatively opaque ways through complicated stakeholder bargains. But for strategists who suspect that more of the same kind of politics will not work, cap and dividend approaches hold the possibility of constructing a new political movement in the next few years. A carefully organized drive for cap and dividend might well bring together environmental advocates, green businesses, and many unions and citizen associations to support the enactment of carbon-emissions caps and the subsequent ratcheting-up of the tax levels to ensure that the United States completes a transition to a green economy, with ordinary citizens reaping economic benefits along the way."
About Fee & Dividend
See this description from the Citizen's Climate Lobby website.
About Cap and Dividend
Cap & Dividend News on Huffington Post
About Cap & Trade
Emissions are capped and allowances under the cap are traded. Cap and trade design elements include how the cap is set, how allowances are allocated, and how the revenues from auctions are spent. Previous cap and trade proposals have often given away permits for free to companies, and included offsets, rather than dividends. A cap and trade system could include dividends, but in order to do so it would need to auction permits.
Cap and Trade or Carbon Tax?
Another way to describe this choice is what economists would call Price or Quantity? A Cap is a quantity restriction on emissions where the price of allowances under the cap can fluctuate. A Carbon Tax sets a given price and allows the quantity of emissions to fluctuate. Although there is a debate between the merits of each system in theory, in practice they both can be done well or poorly. Different coalition members have different perspectives. Dividends for America supports whichever approach results in a carbon price that changes market behavior and emphasizes the dividend component.
Previous attempts at federal carbon pricing
Boxer-Sanders bill 2013
Cantwell-Collins CLEAR Act 2009-2010
State and Regional carbon pricing initiatives
Here are a few approaches to carbon pricing that would result in few or no dividends.
- Revenues given to companies instead of households or individuals.
- Tax swaps such as a payroll tax swap.
- Corporate tax reductions.
- Spending revenues on projects that could be funded in other ways.
- Means-testing dividends, or having dividends that only go to low-income households.
Those approaches would leave less money going to individuals, and result in a smaller dividend.
For that reason, Dividends for America opposes a majority of funds being used in those ways.
Helpful News and Blog articles
Click here for Dividends for America News and Blog
George Shultz and Gary Becker 4-8-13: Why We Support a "Revenue Neutral" Carbon Tax
Peter Barnes, "Who Shall Inherit the Sky?" Yes Magazine. Spring 1999.
Testimony by James Hansen: Carbon Tax & 100% Dividend vs. Tax & Trade
Academic articles and studies
Peter Barnes, Americans for Equitable Climate Solutions and Corporation for Enterprise Development, "Sky Trust Initiative: Economy-Wide Proposal to Reduce U.S. Carbon Emissions"
Harvard Professor Theda Skocpol’s paper “Naming the Problem" February 2013
James K.Boyce & Matthew Riddle., CLEAR Economics UMass Amherst, March 2010 (pdf)
Boyce, James K. & Matthew Riddle. Cap and Dividend: A State-By-State Analysis. Political Economy Research Institute University of Massachusetts, Amherst, August 2009.
Breslow, Marc and Peter Barnes, “Pie in the Sky,” paper presented to the Natural Assets Workshop in Santa Fe, New Mexico, January 21, 2000.
Burtraw, Dallas. Carbon Emission Trading Costs and Allowance Allocations: Evaluating the Options, Resources for the Future, Fall 2001
Bovenberg, Lans and Lawrence Goulder, Neutralizing the Adverse Industry Impacts of CO2 Abatement Policies: What Does it Cost? Working Paper No. 7654 (Cambridge, Mass.: National Bureau of Economic Research, April 2000). http://www.nber.org/papers/w7654
Karen Palmer & Bharvirkar, Ranjit & Paul, Anthony. The Effect of Allowance Allocation on the Cost of Carbon Emission Trading, Resources for the Future, 2001.
Carbon Tax Center, James F. Handley, and Charles Komanoff. “Bloomberg, Economists, Greens Tell Ways & Means: Price Carbon Upstream, Distribute Revenues to Consumers” (a blog about a Congressional Hearing titled "Price Carbon Upstream, Distribute Revenues to Consumers") September 21, 2008.