Monday, December 11, 2023

The Wealthiest 0.1% and Their 3,000 Tons of CO2 Should Pay Higher Taxes: Report


Recent research reveals the substantial carbon emissions of America’s wealthiest, with the top 0.1 percent responsible for 62 times more emissions than an average household. The researcher urges taxation changes, targeting the investment income of the rich, who account for 17 percent of national emissions.

A new study from the University of Massachusetts Amherst has cast a spotlight on the connection between income and carbon emissions in the U.S., especially focusing on the nation’s wealthiest individuals. The results of the research call for a significant shift in carbon taxation, emphasizing taxing income rather than consumption, with the aim to address climate change more effectively. The study’s findings were published in the journal PLOS Climate.

Datasets over a 30-year period analyzed by the researchers revealed that the income of the richest Americans contributes largely to national carbon emissions. The investigation led the researchers to create a carbon footprint for every dollar of economic activity within the U.S., establishing two different values for income’s carbon emissions, known as the supplier and producer values. While the supplier value connects to emissions from industries supplying fossil fuels, the producer value is related to the carbon released directly from business operations.

luxury home with pool
Photo courtesy Florian Schmidinger

“This research gives us insight into the way that income and investments obscure emissions responsibility,” Jared Starr, the lead author, highlighted the significance of these findings for policymakers, said in a statement. “An income-based lens helps us focus on exactly who is profiting the most from climate-changing carbon pollution, and design policies to shift their behavior.”

The study found that the top 0.1 percent of the wealthiest Americans emit around 3,000 tons of carbon a year. This is more than 62 times the 48 tons typically emitted by the average American household, the researchers found. They also found that the top ten percent — those earning more than $178,000 per year — are responsible for more than 40 percent of the country’s national emissions.

This division between active income from employment and passive income from investments played a central role in the study. The findings revealed that for 90 percent of Americans, wages are the primary source of income, and their emissions are closely tied to their salaries. However, for the wealthiest ten percent, the income primarily comes from investments. Particularly, the top one percent of Americans, earning more than $550,000 annually, were found responsible for up to 17 percent of the country’s total emissions.

a yacht on the water
Photo courtesy Mohamed Masaau

Notably, the study also identified a category known as “super-emitters.” These are the top 0.1 percent, whose investment income is mostly derived from finance, insurance, and mining industries. These super-emitters contribute more than 50 percent of emissions and, as stated in the report, are responsible for around 3,000 tons of carbon each year.

“Fifteen days of income of the rich in the top 0.1 percent pollute as much carbon as a lifetime of income for those in the bottom 10 percent,” the researchers wrote. The study suggests that the size of income is not the only factor in carbon emissions but also the industries from which it is generated.

The researchers propose a rethinking of carbon taxes, moving away from taxing consumption to focusing on shareholders’ responsibility for carbon emissions of their investment incomes. The idea is that such taxation could incentivize those profiting from carbon-intensive investments, such as oil and gas, to decarbonize their industries.

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