The tax base is key to upstream v downstream debates
Metcalf 2009 - Professor, Department of Economics, Tufts Gilbert and David [U Chicago Law], "The Design of a Carbon Tax," 33 Harv. Envtl. L. Rev. 499
With respect to the tax base, we show that collecting the tax upstream would make it possible to accurately and cheaply cover 80% of U.S. emissions by collecting the tax at fewer than 3000 points, and that it would be possible to cover close to 90% of U.S. emissions at a modest additional cost. n6 As the base gets broader, the collection costs increase; the tradeoff between the increased collection costs and the benefits of a broader base determines the optimal tax base. The main problem presented by upstream collection is that a tax credit or offset must be given for fossil fuels that are not combusted. For example, if the tax is imposed at the refinery and some distillates are sequestered into products such as asphalt, the tax will be too broad. We discuss how such a credit system would be designed.