Does the indexing of government transfers make carbon pricing progressive?

Indexing has a more striking impact when households are ranked by annual expenditures. Regressivity on the uses side is offset by progressivity in transfer program indexing; the overall burden is progressive over the bottom half of the distribution and regressive across the top half. Categorizing households by annual expenditures tells a different story. Now the uses side impacts are less dominant, so the overall burden of carbon pricing is progressive across the bottom half of the distribution and regressive across the top half. Impacts from factor price changes are hump-shaped, with the greatest relative losses at the top and bottom of the distribution. The indexing of transfers confers significant progressivity to the system. The effect of indexed transfers continues to be sharply progressive under either partial or full indexing.