Can a European wealth tax close the green investment gap?

Kapeller, Jakob; Leitch, Stuart; Wildauer, Rafael

doi:10.1016/j.ecolecon.2023.107849

Cited by 7 publications

(4 citation statements)

References 30 publications

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“…those with the most economic and corporate power) to act in their own self-interest and decarbonize their supply chain and operations in order to reduce taxes on their compensation and investments. Recent work has calculated that a climate inspired wealth tax could indeed be an effective tool to raise revenue for adaptation and mitigation efforts [52,53].…”

Section: Discussionmentioning

confidence: 99%

“…Kapeller, Leitch, and Wildauer also find that a progressive European wealth tax has the potential to raise enough revenue to close the European Union's (E.U.) several hundred billion dollar per year green investment gap [53]. If revenue from capital taxes is reinvested in public infrastructure, such as decarbonization efforts, it can also benefit wealthy countries by increasing social welfare, while reducing extreme economic inequality [54].…”

Section: Policy Implicationsmentioning

confidence: 99%

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Income-based U.S. household carbon footprints (1990–2019) offer new insights on emissions inequality and climate finance

Starr,

Nicolson,

Ash

et al. 2023

PLOS Clim

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Current policies to reduce greenhouse gas (GHG) emissions and increase adaptation and mitigation funding are insufficient to limit global temperature rise to 1.5°C. It is clear that further action is needed to avoid the worst impacts of climate change and achieve a just climate future. Here, we offer a new perspective on emissions responsibility and climate finance by conducting an environmentally extended input output analysis that links 30 years (1990–2019) of United States (U.S.) household-level income data to the emissions generated in creating that income. To do this we draw on over 2.8 billion inter-sectoral transfers from the Eora MRIO database to calculate both supplier- and producer-based GHG emissions intensities and connect these with detailed income and demographic data for over 5 million U.S. individuals in the IPUMS Current Population Survey. We find significant and growing emissions inequality that cuts across economic and racial lines. In 2019, fully 40% of total U.S. emissions were associated with income flows to the highest earning 10% of households. Among the highest earning 1% of households (whose income is linked to 15–17% of national emissions) investment holdings account for 38–43% of their emissions. Even when allowing for a considerable range of investment strategies, passive income accruing to this group is a major factor shaping the U.S. emissions distribution. Results suggest an alternative income or shareholder-based carbon tax, focused on investments, may have equity advantages over traditional consumer-facing cap-and-trade or carbon tax options and be a useful policy tool to encourage decarbonization while raising revenue for climate finance.

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Section: Discussionmentioning

confidence: 99%

Section: Policy Implicationsmentioning

confidence: 99%

Income-based U.S. household carbon footprints (1990–2019) offer new insights on emissions inequality and climate finance

Starr,

Nicolson,

Ash

et al. 2023

PLOS Clim

View full text Add to dashboard Cite

show abstract

“…Options for new EU own resources-such as Emission Trading System (ETS)-based resources, Carbon Border Adjustment Mechanism (CBAM)-based resources, and taxation reforms for financial goods, corporations, aviation, top earners, and wealth owners-have been discussed by Schratzenstaller et al (2022). Some researchers also argue that an EU-wide wealth tax to finance green investments could result in tax revenue in the dimension of the annual investment gap, namely 1.5% of EU GDP annually, with other models generating between 3% and even 11% in additional tax revenue (Kapeller et al 2023). Another option is not to service the EU bonds (entirely) with EU own resources but to allow the build-up of an EU debt stock.…”

Section: A Permanent Eu Investment Fund For Climate and Energymentioning

confidence: 99%

12. Options for a Permanent EU Sovereign Fund

Heimberger,

Lichtenberger

2023

Financing Investment in Times of High Public Debt

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This chapter argues that a new, permanent EU fiscal capacity can contribute to meeting the green-transition challenges and providing countercyclical macroeconomic stabilisation. While the Recovery and Resilience Fund (RRF) is not large enough to address the current challenges, its introduction was an essential step forward in providing an operational blueprint for a permanent EU investment fund. The reform of EU fiscal rules is set to provide insufficient scope for the additional public climate investment required to meet the climate targets. Furthermore, the EU sovereignty fund proposed by the European Commission in the form of the Strategic Technologies for Europe Platform (STEP) adds little new money, focuses on green-tech subsidies instead of public investment, and falls short of providing a realistic vision of meeting public investment

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“…Options for new EU own resources-such as Emission Trading System (ETS)-based resources, Carbon Border Adjustment Mechanism (CBAM)-based resources, and taxation reforms for financial goods, corporations, aviation, top earners, and wealth owners-have been discussed by . Some researchers also argue that an EU-wide wealth tax to finance green investments could result in tax revenue in the dimension of the annual investment gap, namely 1.5% of EU GDP annually, with other models generating between 3% and even 11% in additional tax revenue (Kapeller et al 2023). Another option is not to service the EU bonds (entirely) with EU own resources but to allow the build-up of an EU debt stock.…”

Section: A Permanent Eu Investment Fund For Climate and Energymentioning

confidence: 99%

Financing Investment in Times of High Public Debt

2023

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The fourth book in the ‘European Public Investment Outlook’ series focuses on the urgent issue of how to finance needed investment in critical tangible and intangible infrastructure given high levels of public debt, a thorny problem facing many governments across Europe. Drawing on expertise from academics, researchers at public policy institutes and international governance bodies, the contributors analyse the current situation and prospects and propose feasible solutions. Financing Investment in Times of High Public Debt offers a powerful combination of high-level analysis of cross-continental policies and trends, with close examination of specific contexts in France, Italy, Germany and Spain. The chapters in Part II explore challenges including how to finance climate investments, the extent to which national promotional banks can offer solutions, EU budget reform and recent trends in tax progressivity. This book is essential reading for economists, policymakers, and anyone interested in implementing and financing public policy in Europe and wanting to better understand the intricacies of EU governance and institutions.

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Can a European wealth tax close the green investment gap?

Cited by 7 publications

References 30 publications

Income-based U.S. household carbon footprints (1990–2019) offer new insights on emissions inequality and climate finance

Income-based U.S. household carbon footprints (1990–2019) offer new insights on emissions inequality and climate finance

12. Options for a Permanent EU Sovereign Fund

Financing Investment in Times of High Public Debt

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