A Carbon Tax to Combat Climate Change and Support Low-Income Households
Summary
Putting a price on carbon is fundamental to achieving U.S. climate goals for 2050. Many options for carbon price-setting exist, and in this policy brief we propose a tax-and-dividend approach that mitigates the challenging impacts that carbon policies have on poor and suburban/rural communities, particularly those in Middle America. Such a plan will be a net gain for low-income households, in contrast to other proposed climate change policies which will adversely affect the poor. Furthermore, it has been shown that even a modest carbon tax can have large benefits in terms of cost-effectiveness.
For that reason, we propose the following:
- Introduce a carbon tax-and-dividend plan as part of any federal climate policy.
- Use revenue to offset impacts on low-income households, taking into account enormousregional disparities.
- If political dynamics favor regulatory standards, consider coupling such standards with amodest carbon tax whose revenue can be used to offset their regressive effects.
The Federation of American Scientists supports the Senate version of the Fix Our Forests Act.
The federal government needs to strengthen energy systems through investments in energy infrastructure across energy generation, transmission, and use.
The Federation of American Scientists supports The Heating and Cooling Relief Act of 2025. With summer right around the corner, it is more important than ever to ensure life-saving home cooling is affordable to all Americans.
The Cool Roof Product Rebate Act of 2025 would direct the Secretary of Energy to establish a federal rebate program for the purchase and installation of cool roofs. Cool roofs can help households lower energy costs, prevent the negative health impacts of high indoor temperatures, and improve community resiliency by reducing the strain on the grid.