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Has British Columbia Shown the Way?

As we look for safe ways to descend the fiscal cliff that will minimize harm to the economy, a carbon tax offers one possibility to raise revenues that could prevent an increase in income taxes or dire cuts in safety net programs. Integrated into a broader tax package of tax reform, a carbon price can also facilitate reductions in marginal tax rates. The western Canadian province of British Columbia offers one example of a well-designed revenue-neutral carbon tax. The carbon price, now i