Why the Time is Right for a U.S. Tax on Carbon Fuels

Lawrence H. Summers, Harvard University

Plunging oil prices create an opening for a new U.S. carbon tax to limit global warming and fund infrastructure investments and tax benefits for workers. One of America’s leading economists explains how this tax could work and why it could enjoy broad support.

In his new SSN brief, Summers explains the economic logic of a carbon tax and pinpoints why the current downturn in energy prices makes the tax easier for consumers to afford. He suggests an initial design for the new levy, explains how it could spur complementary steps in other nations, and suggests ways to allocate the annual revenues a carbon tax would generate.

Lawrence Summers has conducted influential economic research in many areas, including public finance, labor economics, macroeconomics, development economics, and issues of global health and education. In stints of public service, he has served as the U.S. Secretary of the Treasury under President Bill Clinton, Director of the National Economic Council under President Barack Obama, and Vice President of Development Economics and Chief Economist of the World Bank. He helps to shape American and international debates on the leading economic issues of the day through speeches, regular newspaper columns, and participation in public forums.

January 2015