Geography, income, and the incidence of a Massachusetts carbon tax

I use spatial microsimulation to estimate the geographic incidence of the consumer-facing portion of various revenue-neutral carbon tax designs in Massachusetts. I identify a substantial urban-rural disparity in impacts that is reduced, but not eliminated, by proposed revenue-targeting mechanisms. I further demonstrate that seemingly small variations in the definition of rural households can have substantial impacts on urban-rural equity and the distribution of gains and losses. Proposed policies are highly progressive in the aggregate with most low-income households receiving more in rebates than they pay in taxes, but notable numbers of low-income households are likely to experience significant losses. Methodologically, I improve upon related work, by considering the full distribution of possible effects that each household might experience and demonstrate the importance of this approach. Politically, I find that Democratic-held districts fare better under all policy variations. There are noticeable trade-offs between policies aimed at improving median outcomes in each district and those designed to minimize the number of households facing significant financial losses within each district.