The money of America's top 10% is causing almost half of US emissions. So tax it, researchers say.

• The richest 10% of Americans' income has generated 40% of US carbon emissions, a new study found.
• Investments by the top earners and "super emitters" play an outsized role in the climate crisis.
• Tax shareholders rather than focusing on consumers, the study authors argue.

Income for the wealthiest 10% of Americans generates over 40% of the country's emissions of greenhouse gases, a new analysis found.

Those gases, like carbon dioxide and methane, are filling the planet's atmosphere, trapping more and more heat from the sun, and causing the climate crisis.

So far this summer, heat waves are barraging the planet, Maui suffered the deadliest US wildfire in over a century, and forecasters project an "above-normal" hurricane season due to record-high sea temperatures.

The call to slash emissions and reign in the climate crisis is growing more and more dire. In the US — the world's second-biggest carbon emitter — a small number of people hold nearly half the responsibility for that, the new study suggests.

"So 40% of the US emissions, I guess you could say, are created in order to create income for the top 10% of households," Jared Starr, a sustainability scientist at the University of Massachusetts Amherst, and the lead author of the analysis, told Insider.

The study, published in the journal PLOS Climate on Thursday, adds more evidence for a growing truth about climate change: the people and countries who contribute the least to causing the crisis are suffering the most from it.

"It just seems morally untenable to have such an extreme disparity in our society," Starr said.

He says the findings also show that policies like carbon taxes are barking up the wrong tree. Instead of taxing consumers, he says, tax the wealthiest people's investments.

Consumer power — and responsibility — may be less than you think

The earnings of shareholders, rather than consumers, seem to have an outsized emissions impact.

That's because the further up the income distribution you go — from the top 10% to the top 1% to the top 0.1% — the more emissions are coming from investments, rather than wages those households earn, Starr and his team reported.

You can see the huge role of the wealthiest Americans' investments in this chart showing the study's findings:

"If you think about why businesses exist, in the US, at least, it's to create value for shareholders," Starr said.

That's why he ran this analysis in the first place: to see "how much greenhouse-gas emissions are used to create this value for shareholders," he said.

In an unprecedented investigation into the emissions impact of investments, the study authors assessed 30 years of data (from 1990-2019) on inter-sectoral financial transfers and traced the carbon emissions associated with them.

They made separate calculations for emissions from the supply chain — such as the extraction of coal from the ground — and emissions from production — such as burning coal in a power plant to produce energy for consumers.

They then linked those calculations to data on wages and investment income for over 5 million Americans.

Not only was the top 10% earners' income generating over 40% of emissions, but the income of the top 1% was responsible for 15%-17% of emissions, they found.

Then there were the "super emitters." Almost all are in the top 0.1% of US earners. Those households — more than 26,000 of them — earn about $11 million per year on average.

For them, 15 days of income generates "as much carbon pollution as a lifetime of income for a household in the bottom 10%," Starr said in a press release.

Taxing the rich, rather than consumers, could be more effective

Carbon taxes — where fossil-fuel companies must pay the government for each ton of greenhouse gases they emit — are an increasingly popular policy worldwide. Dozens of countries have implemented them. In the US, multiple proposals for a carbon tax have been introduced in Congress.

But companies usually pass this tax to consumers by raising their prices, according to the International Monetary Fund. That means carbon taxes hit low-income households most heavily.

Starr and his co-authors argue that a more effective, and fairer, policy would be to "tax shares of companies based on how much carbon pollution they're enabling," he explained.

Over time, that tax could incentivize shareholders and financial-services companies to shift their investments away from industries like oil and gas, and towards more sustainable industries like solar and wind energy.

Such a strategy would have a larger impact on polluting industries, the analysis argues, and it would shift the financial burden of cutting emissions away from the poor and onto the wealthy.

"I'm shining a light there, because I think we all sort of felt that there was this disparity between rich and poor in terms of climate responsibility," Starr said.

That's not to say there isn't a place for consumer-focused strategies to reduce emissions, such as driving electric vehicles or eating less meat. Those movements can still play a role.

But Starr wants to see policymakers put more onus on investors and the wealthy, since his analysis indicates their money created so much of this problem in the first place.

This story has been updated. It was originally published on August 17, 2023.