So you're proposing to use carbon taxes as a tool for....um....income redistribution?  WHAT?  Even if I were to concede that income redistribution were a laudable objective (which I don't) using carbon taxes to achieve it would be so inappropriate as to border on stupidity.  Any politician that proposed this (I would hope) would be laughed off Capitol Hill for such an obviously pandering proposal.

It's also less effective: if people simply get back part or most of what they pay in carbon taxes then they have less incentive to reduce their carbon footprint.

Why not use the money to fund sustainable and efficient energy research?  Because we won't see the result immediately?  That's roughly analogous to saying we shouldn't fund primary education because we won't see the benefit of educating today's 10-year-olds for another 15-20 years.  It's a longer term investment in solving the very problem the tax was meant to alleviate.  Not to mention that when carbon tax revenues start to fall  with be roughly the same time they aren't needed as much to fund energy research.  The system will wind down by its own design.  It seems to me a much better solution than an obvious hand-out designed to build political support from the uninformed masses who could care less about climate change.

As a side note:  the taxes would start out as a progressive tax, but may not end up that way.  There are clean technologies out there, in ever increasing numbers.  These technologies, however, are mainly accessible to the wealthy. When was the last time you saw a family below the poverty line driving a Prius or installing solar panels?  The wealthy have much greater means to reduce their carbon footprint (and therefore avoid paying the taxes) than do the poor.  These carbon taxes could very well turn out to be regressive.  It would have achieved the goal of getting the overall level of carbon emissions reduced but the revenue may end up coming more from the poor.  This is not, in my opinion, a reason to scrap the tax.  I am just pointing out that some of the more "feel-good" aspects of this proposal (income redistribution and a progressive tax) may be counter-productive, beside the point, or false.

The answer is that the carbon taxes without something such as I describe are also a means of income redistribution, a means of redistributing income upwards. I specifically said we need a clean energy fund--financed from some other source. And given a clean energy fund that helps people of all income brackets reduce consumption, there is no reason such a system should ever become regressive. This is not a share-wealth-proposal. It is progressive, but only very slightly so--a means of ensuring that most people don't lose anything by a carbon tax. (There is no way to be perfectly precise, and ensure everyone breaks even; ensuring that an overwhelming majority come out slightly ahead, and a tiny minority come out slightly behind is the closest we can come.)

Thanks for responding Gar.  The most obvious scenario to me that would make a carbon tax redistribute income upwards would be one in which carbon tax revenues were in fact used to fund energy research, since the money would go towards paying highly educated researchers and white-collar administrators.  

I just don't see how this is necessarily a bad thing.  If we use revenue from carbon taxes to fund research it will most likely make the efficiency gains come more quickly, which will lower the carbon footprints for people in all income brackets, and therefore the taxes.  Also doing this means we would not have to find funding elsewhere for the research, and could instead cut income taxes for the poor, or provide money for other underfunded social programs.

I am a little confused about your definitions of regressive and progressive.  A carbon tax, like a sales tax, will necessarily be a regressive tax because on the whole poor people spend a larger proportion of their income on energy than rich people do.  A tax does not change from being regressive to progressive simply because of what you do with the revenue.

Instead of simply cutting everyone a check for the same amount (which would indeed result in the poorest people getting back more than they paid), why not use the money for a subsidy to pay for energy efficient technology for the poor in the same manner we provide the poor with health insurance through medicaid?  Not only would this help to alleviate the tax burden but would also help to poor reduce carbon emissions in a way that was not previously possible to them (not to mention giving them additional incentives to reduce emissions in a way that giving them their money back would not).

I'd love to hear your thoughts.

No the point of carbon taxes is not to discourage consumption. But if you don't use the revenue from them AS A STIMULUS - either by spending in some way that broadly benefits most people, or by returning the revenue directly to the people you will discourage consumption.   So for instance using a carbon tax to cut income tax rates probably would discourage consumption of many things -not just energy.  Also a cap and trade system that gives away permits rather than raising revenue, and thus funnels huge profits to a few large corporates will discourage overall spending.

In terms of how much carbon taxes will raise prices overall - it depends on how well we respond with efficiency improvements. Because embedded energy is not the only way energy affects prices. Transportation costs, energy costs of running a retail store. And from the gas price shocks in the 70's it seems that it is not just a matter of energy costs being past along. For some reason what gets passed on are those costs, plus more. Probably anytime someone is force to raise a price, they look for the next optimum price/profit point - which is usually above the minimum they are forced to raise prices to. In others words if energy costs force you to raise price 2.5% you may find you suffer no greater loss in sale by raising price 3%.  And at the lower end of the income spectrum, especially for people on fixed incomes, a sharp rise in energy prices can spark the heat/eat dilemma. A good reason to switch to clean energy in the long run, but something we need to protect against in the short run.    Again, I think returning revenue directly to the people who the emissions tax (everybody) works better than putting it into any particular program.

Actually net effects of a tax depend on where the money goes to. A slightly regressive tax that is spent in a sufficiently net progressive way can be progressive overall. For example, many nations fund health care for everyone from a combination of a value added tax and payroll taxes. But because the poor, working and middle classes benefit so much from having guaranteed decent health care available, they generally end up better than people in systems dominated by insurance. Another words, a revenue/spending combination can be progressive or regressive even if the revenue end is regressive. An example of the reverse would be a dictatorship that uses an income or wealth tax to help pay for thugs that push people around. Progressive revenue source, net regressive affect.

In terms of using revenue from a carbon tax to fund clean energy development, plus perhaps aid for the poor: you have a very unstable situation. Middle class people tend to turn against programs that support only the poor. Think of medicaid. The most popular programs are ones where everyone is in the same point - where everyone benefits.

So taking the revenue from a carbon tax and returning directly to the people ends up with something politically stable - hard to take away once you have.

In terms of funding clean energy from something other than a carbon tax - I think it is a good not a bad thing to have funding source that outlasts the current crisis. Because eliminating fossil fuels does not mean we eliminate  the need for improvements.  We may well want to learn to tap higher percents of the sun's energy, of the wind's power of the the earth's heat than we know how to do now - commercializing currently experimental 40% efficient solar cells, tapping wind power flying energy generators at 15,000 feet and higher, accessing geothermal energy outside of tectonic faults and so on.