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Curb Your Enthusiasm For Pigovian Taxes, Victor Fleischer

Faculty Scholarship

Pigovian (or “corrective”) taxes have been proposed or enacted on dozens of harmful products and activities: carbon, gasoline, fat, sugar, guns, cigarettes, alcohol, traffic, zoning, executive pay, and financial transactions, among others. Academics of all political stripes are mystified by the public’s inability to see the merits of using Pigovian taxes more frequently to address serious social harms, some even calling for the creation of a “Pigovian state.”

This academic enthusiasm for Pigovian taxes should be tempered. A Pigovian tax is easy to design—as a uniform excise tax—if one assumes that each individual causes the same amount of harm with …