Economic modeling study finds that corporate tax rules favor high-emission firms in the United States, indicating debt tax reforms could cut emissions without harming GDP.
We study the relationship between corporate income taxation and carbon dioxide (CO 2 ) emissions in the United States. We show CO 2 -intensive firms benefit more from the tax advantage of debt and pay lower income taxes on their capital income. Building on these new facts, we provide evidence that a cut in the corporate income tax rate leads to a larger expansion of clean firms. We develop a multisector general equilibrium model that accounts for our evidence and quantify the impact of corporate tax reforms on aggregate emissions. A policy that eliminates the tax advantage of debt could reduce aggregate emissions without affecting GDP. (JEL D22, G32, H25, H32, Q52, Q54, Q58)
No takes yet. Share an insight, caveat, or question.
Iovino et al. (2026) studied this question.
Synapse has enriched 5 closely related papers on similar clinical questions. Consider them for comparative context: