Politics of Green Taxation: Understanding Public Support for Climate Tax Cuts

• In Event: Attracting and Regulating MNCs

Abstract

Political scientists are studying individuals’ opinions about policies to address the impacts of climate change with greater frequency. However, little is known regarding how the American public perceives a recent tactic employed by the federal U.S. government to encourage climate-friendly initiatives: providing tax credits to corporations. These newer efforts to address climate change, such as the Inflation Reduction Act in the United States, utilize potentially controversial economic policies, such as corporate tax cuts, in an effort to win over support of people opposed to more traditional green policies. If such a policy compromise is to remain sustainable, there must be a broad swath of the American public that supports the policy mechanism. Leveraging both a forced-choice conjoint experiment and a vignette experiment, we investigate when and why Americans support the use of tax incentives to promote green investment. Our findings reveal widespread support among Democratic respondents for these climate-focused tax incentives, which goes against classic expectations of left-wing opposition to corporate tax cuts. Moreover, through our experiments, we demonstrate that Republicans also exhibit heightened support for such green incentives, especially when framed within the context of tax competition to strengthen American business. Thus, we find that green tax incentives are politically popular across a broad swath of Americans. However, part of their popularity is driven by the association with international competition, rather than international cooperation. These insights offer crucial understanding for policymakers seeking politically sustainable approaches to promoting environmental initiatives, while offering insight into the evolution of international cooperation to limit carbon emissions.

Authors

• Tyler Ditmore, UNC Chapel Hill

• Eric Parajon, University of North Carolina, Chapel Hill