Leviathan carbon taxes in the short run
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- Tol, R.S.J. Climatic Change (2012) 114: 409. doi:10.1007/s10584-012-0544-z
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A cap is imposed on the carbon tax rate if the total tax revenue is not allowed to increase. Using recent data on the carbon-intensity of the economy and the overall tax take, I show that this cap constrains almost any climate policy in at least some countries. A larger number of countries, emitting a substantial share of global carbon dioxide, cannot fully participate if the carbon tax (or equivalent alternative regulation) is high enough to meet the 2 °C target. For that target, the carbon tax revenue in 2020 is greater than 10 % of total tax revenue in every country.