A hotter planet is making life more expensive. There’s the big-ticket stuff, of course, like the property losses and higher insurance premiums that come with supercharged natural disasters. But a deeper look shows that climate change is steadily draining wealth in ways that aren’t as obvious, like the hidden charges car dealers add to pad out the cost of a sale, except these are permanent. Call it a stealth heat tax.

Temperature changes alone cut U.S. incomes by 12%, on average, between 2000 and 2019, according to a study published in December by Derek Lemoine, an economics professor at the University of Arizona. Lemoine has previously estimated average long-term losses during that period of 1%, but that was based only on localized impacts of hotter weather. His latest research is the first effort to account for how temperature changes in one part of the U.S. can affect people in entirely different parts. The difference is drastic.

“You might think, ‘It’s hotter where I live, and that’s hurting me in some way.’ But that’s only a tiny share of the damages,” Lemoine told me in a phone interview. “Most of the damages are from everywhere getting hotter together all at once.”

For an example of how this might work, consider corn. Say hot weather causes a bad harvest in Iowa, which results in higher corn prices across the country, not only at grocery stores but for every industry that uses corn. And that’s a lot more stuff than you’d think, from aspirin to sheetrock. Maybe some corn farmers enjoy a boost in income, but the rest of us lose money — including those of us in places that didn’t get as hot as Iowa.

In other words, we’re all in this together. Some parts of the country might stay relatively shielded from extreme heat and climate disasters, but no one escapes untouched. Everybody pays a heat tax. Extreme heat not only disrupts harvests but affects workers’ health and productivity across a variety of industries. Many of the pathways by which local heat affects the welfare of the rest of the country are still a mystery, Lemoine noted, and need more research. For now, we can at least see the results in the data.

Lemoine’s confidence band for climate damage to incomes is wide, ranging from as low as 2% to as high as 22%. But even a 2% loss is nothing to dismiss. Based on 2000’s gross national income, that’s a loss of more than $200 billion.(1) A 12% hit pushes the cost above $1.2 trillion. The planet has only become hotter since 2019; the past three years have been the hottest in human history.

And, as with so many of these relatively early studies of the interaction of two complex systems — climate and economics — the exact speed doesn’t matter as much as the direction: Climate change is hurting the economy, and in many more ways than one, as a growing body of literature shows.

Those weather disasters have cost the U.S. economy $7 trillion in cleanup and higher insurance premiums in just the past 12 years, Bloomberg Intelligence has estimated. That’s a bigger hit than the Great Depression, and it’s on top of Lemoine’s stealth heat tax.

Meanwhile, wildfire smoke alone took $1 trillion more in wages from workers in retail, wholesale, transportation, construction, mining and agriculture industries between 2020 and 2024, BI has estimated. That’s an additional stealth smoke tax, which could grow as the planet warms.

Every 1 degree Celsius hotter the planet gets extracts 20% from global GDP, according to a recent National Bureau of Economic Research study. Estimates of economic losses deep into the murky future of 2100 range from a quarter of global GDP to more than a quadrillion dollars. That’s a confidence band you could drive a Cybertruck through, but 75-year predictions of the climate-economics matrix are several times trickier than forensic studies of the past.

These deep-time forecasts also don’t account for humanity’s ability to adapt or take greater steps to slow down climate change. Both could lower the economic toll drastically. One such solution could be an actual carbon tax, which would make burning the stuff more expensive and encourage the transition to cleaner energy. Unlike those climate taxes, the carbon tax could make itself obsolete.

Unfortunately, President Donald Trump’s U.S. government has outlawed the very concept of climate change, attacking research and support for both mitigation and adaptation, setting back progress by decades. Much of the rest of the world has taken the opportunity to slack off, too. It’s no surprise that U.S. greenhouse-gas emissions rose 2.4% in 2025, the first increase in two years, outpacing GDP, according to Rhodium Group. We’re moving in the wrong direction.

Once upon a time, lawmakers in a now defunct body called “Congress” (ask your parents) set tax rates for Americans. Climate taxes, in contrast, are ones we’ve voluntarily levied on ourselves as a price for the luxury of continuing to burn fossil fuels and otherwise spew greenhouse gases into the atmosphere. We still have the power to decide how much larger these taxes can get.

(1) Lemoine is measuring per capita income, not GNI, but I give you the GNI number just to give a sense of the scale.

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This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Mark Gongloff is a Bloomberg Opinion editor and columnist covering climate change. He previously worked for Fortune.com, the Huffington Post and the Wall Street Journal.

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