Taxing uber-polluters: carbon inequality and support for wealth taxation to finance the green transition

Carbon inequality implies that wealthy individuals contribute more to climate change than asset-poor individuals. This pattern is primarily driven by higher levels of consumption and investment in carbon-intensive industries. Yet the prevailing policy response – the carbon tax – is often perceived as regressive and therefore politically unpopular, given that perceptions of distributional fairness strongly shape public support for climate policies. We conduct two complementary survey experiments in a large online survey in Germany (n = 4653) to examine preferences over a recent policy proposal developed in response to accumulating evidence of carbon inequality: wealth taxation to finance the green transition. Using a randomized controlled trial, we find that while baseline support for the wealth tax is high (72 percent), exposing respondents to a compensatory argument emphasizing carbon inequality does not further increase this support. However, emphasizing carbon inequality increases support for using wealth tax revenues to finance the green transition, making this the most popular option for using the revenue. A conjoint survey experiment further demonstrates that spending wealth tax revenue on public investment in transport infrastructure, subsidies for private investment in low-carbon technologies, and redistributive measures such as a lump-sum payment to all households paying carbon taxes receive the highest support among German respondents. In contrast, subsidies for the purchase of electric vehicles and investment in geo-engineering are unpopular. These findings suggest that invoking carbon inequality can help build democratic majorities for using wealth taxation to finance investment in climate change mitigation and adaptation. Hence, there is a path towards lower emissions and greater climate resilience that is unlikely to produce popular backlash.