Governments can boost income equality and protect the environment through optimal taxation
The article explores how to design taxes to address environmental issues while also redistributing wealth fairly. The researchers find that adjusting taxes for activities causing pollution can affect how other taxes are set. In a basic model, fixing pollution leads to changes in taxes on polluting goods, but not on clean goods or income. However, in more complex scenarios, this may not hold true. They also look at how taxes can be optimized over time to tackle long-term environmental problems.