October 19, 2016


The left vs. a carbon tax : The odd, agonizing political battle playing out in Washington state. (David Roberts, October 18, 2016 , Vox)

Before jumping into the conflict, it helps to understand exactly what I-732 would do. Luckily, it's pretty simple. It would do four things:

Impose a tax on carbon emissions, starting at $15 per ton in 2017, rising to $25 per ton in 2018, and then rising every year thereafter at 3.5 percent plus inflation, topping out at $100 a ton (in 2016 dollars). The tax would reach citizens in the form of a gas tax and a tax collected by electric utilities.

Reduce the state sales tax by 1 percentage point.

Fund the working families tax rebate (WFTR), which would bump up the federal earned income tax credit to provide up to $1,500 a year for 460,000 low-income households.

Eliminate the business and occupation tax on manufacturing.

According to CarbonWA, the group that put it on the ballot, this policy has a number of things going for it.

First is the large, predictable, and steadily rising price on carbon, something climate policy analysts have been advocating for decades as the most cost-effective way to reduce emissions.

Second, it protects low-income families. Reducing the sales tax, in combination with the WFTR, would more than offset the otherwise regressive pocketbook impact of the carbon tax on the lowest-income quintile. It would have a net progressive impact on the state tax code (currently the country's most regressive).

Third, the elimination of the B&O tax would prevent local manufacturers from leaving the state to escape the carbon tax, thus protecting jobs.

And fourth, because the policy is "revenue neutral" -- it returns all the tax revenue as tax cuts, leaving none for the government to spend -- it is attractive to fiscal conservatives. [...]

Rather than attempting to please every left constituency, Bauman believes, climate policy should sidestep perennial battles over, say, the size of government. It should surgically target climate change and attempt nothing else. That way, everyone who cares about climate change, including many conservatives, can get behind the same policy, without getting caught up in partisan gridlock.

The way to do that, Bauman concluded, is with a revenue-neutral tax swap. It cuts carbon without growing the size of government, so there's no way for conservatives to cast it as tax-and-spend liberalism.

That was the theory of change informing CarbonWA, the group Bauman founded: Craft a policy that can unite people who care about climate change, from the left and the right. Bipartisanship is the only route forward.

The model for Bauman was British Columbia, where a revenue-neutral carbon tax passed in 2008. It rose to $30 a ton in 2012, but has been frozen there by the provincial government. Its effectiveness is hotly debated, but -- key for Bauman's purposes -- it remains fairly popular across the political spectrum. [...]

Washington has no personal income tax. It relies on sales taxes, which hit low-income residents hardest. Consequently, it has the most regressive tax system of any state in the nation. The state legislature has a long and ignominious history of underfunding its priorities, to the point that it is currently under a court order from the state Supreme Court to find new education funding. (It still hasn't.)

It is no surprise, then, that the alliance's core objection to I-732 is that it is revenue-neutral -- it surrenders all that precious revenue, which is so hard to come by in Washington. That, more than anything else, explains why alliance groups are not supporting it.

Posted by at October 19, 2016 3:10 PM