Correction to carbon pricing paper
An error has been found in my 2011 carbon pricing paper. In Table 2 on page 17 the results presented at the time of publication were per capita not, as stated, per household. Runs modeled using Statistics Canada’s Social Policy Simulation Database and Model (SPSD/M) for carbon tax must be done on a household basis. In my peer review text I converted this to per capita to compensate for differences in household size across the income distribution. Post-peer review I thought that this mix of deciles based on households but data presented on a per capita basis was potentially confusing, and shifted to using households as the unit of analysis to be clearer to readers, but I neglected to change the table.
I apologize for the error and regret not being more careful. A revised version is posted here with the proper Table 2 (here is a screenshot of the old Table 2, which is still technically correct if you replace “per household” with “per capita”). The error is constrained to that one table, and only one line of text in each of the summary (p. 5) and main text (just above the table). So the text reading: “In 2010, carbon taxes paid averaged about $200 per household, with a range of $113 per household in the lowest-income 10% rising to $300 in the top 10%, and $617 in the top 1% of households.” Now reads: “In 2010, carbon taxes paid averaged $386 per household, with a range of $129 per household in the lowest-income 10% rising to $795 in the top 10%, and $1,394 in the top 1% of households.”
The revision does not change any of the paper’s key findings. If anything, it strengthens the original case about a regressive shift in the carbon tax and revenue recycling regime, particularly when corporate income tax cuts factor in. The impact of the correction is minimal in the lower deciles as they have smaller family sizes, whereas higher up the distribution larger family size amplifies both average carbon tax paid and the value of tax cuts and credits received, with top households faring even more favourably than I had originally stated. While the table is for 2010, as of 2012 the regressive shift has become much worse, with carbon tax going up but low-income credits not rising, and a larger share of revenues going to corporate income tax cuts.
Topics: Climate change & energy policy, Environment, resources & sustainability, Taxes