I propose that the Obama administration draft and submit refundable carbon tax legislation to the Congress. Key aspects of the refundable carbon tax:
- All revenues of the carbon tax would be used to rebate a portion of social security and medicare taxes.
- The carbon tax would be relatively small but rise over time to allow for major carbon producers to adjust.
- Once the carbon tax hits a determined real rate, it would be linked to inflation to ensure that the incentive is maintained over time.
The purpose of this legislation is to encourage alternatives to carbon-based fuels and production while minimizing the impacts to the economy and households by refunding carbon tax revenues by rebates to employment taxes.