You still have an incentive to reduce emissions, because your dividend is the same regardless and you can reduce your fees. And since most people's net emissions are less than average, most people come out ahead.
You say that like it's not the goal.
Yes. People will do fewer polluting things. That's the point.
The harms from the externalities vastly dwarf any total economic reduction.
It's also true that a person with lower-than-average emissions will pay out less than they get back. They'll have a strong incentive to reduce emissions, but even if they don't reduce emissions they'll be better off than before. These people will be the majority.
The people who might feel worse off are those who emit a bit more than average without being rich. They'll need to modify their behaviors if they want to come out ahead. Of course that's part of the whole point.
A lot of people might actually be ok with changing their behaviors, if they know everybody's doing it so it will actually make a difference. Right now we have this public goods situation where the outcome is going to be the same regardless of what you personally do. Dealing with public goods situations is the main reason for taxes in general; it's hard to fund roads with voluntary donations, so most people are ok with paying taxes for roads.
The other benefit of fee-and-dividend is that it makes low-carbon energy sources more competitive. It's not just about getting people to carpool or whatever, it's about getting fossil fuels off the grid and the roads, because they just can't compete.
Of course if that works, the end result might be higher prices that don't get reflected in the dividend. But we don't end up in a apocalyptic nightmare, so there's that.
Wealthy people own businesses and those businesses have a strong incentive to reduce emissions, when they do, they end up reducing the tax burden on their consumers.
The average person wouldn’t have to organize carpools, though it’d certainly be incentivized - at least at the beginning, I’m assuming most wouldn’t, so not doing that, you’d still be a net recipient of tax money. But part of the whole point is that we can’t continue living exactly the same way, if we don’t want to destroy ourselves, and especially our children.
The entire point of a pigovian tax is to create a deadweight loss proportional to the harm an externality causes.
>The amount of money that gets distributed to you with a carbon dividend inevitably is going to be less than your additional tax burden or the consumer surplus from the goods and services you otherwise would have bought without the tax
As I already said, the difference between what you pay in and get out is an incentive to make you cease the activity that produces the harmful externality.
>Of course, you make very good arguments about why the dead weight loss is absolutely dwarfed by the negative externalities of fossil fuel emissions.
That is how a pigovian tax is supposed to work.
>Even if you don't consider climate change, air pollution is a contributor of over 100,000 deaths in America alone. However, this point is moot if people aren't willing to act on those externalities.
This is irrelevant, lots of countries have adopted carbon taxes. The benefits are obvious, less bureaucracy for businesses, more money to poor people, less shaming for a lack of personal action, mitigating climate change, less corruption and wasteful spending.
The alternative to carbon taxes isn't no carbon taxes, the alternative is more micromanagement by the government which is more likely to result in even bigger deadweight losses which are unlikely to be proportional to the amount of negative externalities that are being avoided.
But this year the penny finally dropped for me how demoralizingly futile it is to make rational carbon policy in the US by talking about its merits. The success of the Inflation Reduction Act ($370bn for climate) was entirely due to a cunning political hack: not taxing individuals (only corporations) and reducing the deficit at the same time (by staffing the IRS to enforce existing tax collection laws), so that it could be acceptable to the holdout conservative Democrats.
Let's say there is a wood stove that increases cooking efficiency by 2x, this means a lot less trees have to be cut down for cooking. However to a person for whom trees are free, they aren't going to buy a better stove just to save on emissions, they will only start once they run out of trees which is when it is already too late. By charging a fee per tree, even if it is a token amount, people will start calculating and weighing whether cutting down more trees or less trees and buying the stove is the better option. Once they have made the initial investment they may even tell their neighbours about it. A single person changing their mind, can change the minds of everyone.
But why would anyone voluntarily follow that? It's not like money is generated out of nothing.