Wealthy individuals are responsible for disproportionately high levels of CO2 emissions, with investments being the main culprit. As such, experts suggest shifting towards an income and stock-based taxation system instead of taxing consumer goods. A recent study by Oxfam revealed that the richest 1% of the world’s population is responsible for over double the amount of CO2 emissions compared to the poorer half of the population. Researchers from the University of Massachusetts Amherst (UMass) delved deeper into the relationship between household income and emissions in the US. According to their publication in the PLOS Climate journal, the top 10% of the population is responsible for around 40% of the country’s greenhouse gas emissions. The high emission inequality is not solely due to personal consumption but is mainly caused by investments in companies that emit CO2 to generate income.
While it is well-known that an individual’s consumption behavior significantly affects their CO2 emissions, these measures are not enough. Additionally, consumption-based approaches, such as higher CO2 taxes, disproportionately punish low-income individuals while having little impact on those who invest a large portion of their income. The researchers suggest that a different form of CO2 taxation may be more effective. They focused on how emissions generate income instead of how they enable consumption. The researchers analyzed data from over 30 years, focusing on a database with over 2.8 billion financial transactions and tracking their income and CO2 emissions. They linked the emission data with another database containing demographic and income data from over five million Americans. They found that over 40% of emissions can be attributed to the top 10% of income earners, with the top 1% responsible for 15-17% of the country’s emissions.
The researchers recommend an income and stock-based taxation system instead of taxing consumer goods. This approach could generate significant revenue to invest in decarbonization measures. By doing so, the US could motivate its citizens to decarbonize their industries and investments. The study sheds light on how income and investments obscure emission responsibility and highlights the need for a more effective taxation system.
