In the United States structure and equipment capital are effectively taxed at different rates. Recently, President Obama joined the group of policy makers and economists who propose to eliminate these differentials. This paper analyzes the consequences of such a reform using an incomplete...

We quantitatively characterize optimal carbon, capital, and labor income taxes in an economy-climate integrated assessment model that features overlapping generations and distortionary fiscal policy. First, we show that the optimal carbon tax significantly differs from the Pigouvian carbon levy...