Carbon Taxes
A topic you haven’t heard much about until recently…get prepared
It's a BIG DEAL
Emissions of carbon dioxide and other greenhouse gases are changing the climate. A carbon tax puts a price on those emissions, encouraging people, businesses, and governments to produce less of them. A carbon tax’s burden would fall most heavily on energy-intensive industries and lower-income households. Policymakers could use the resulting revenue to offset those impacts, lower individual and corporate taxes, reduce the budget deficit, invest in clean energy and climate adaptation, or for other uses.
Early in 2018, two bills on carbon pricing were re-introduced in the Senate and the House. The first is the Healthy Climate and Family Security Act (H. R. 4889 and S.2352), a bicameral effort from Representative Beyer (D-VA) and Senator Van Hollen (D-MD), calling for a national cap-and-dividend. The second bill, the American Opportunity Carbon Fee Act (S. 2368 and H.R. 4926), would implement a carbon tax and was introduced by Senators Whitehouse (D-RI) and Schatz (D-HI), and Congressmen Blumenauer (D-OR) and Cicilline (D-RI).
Even though the bills employ different strategies to tackle GHGs, the solutions they put forward share the same market-based nature. The American Opportunity Carbon Fee Act sets a fee starting at $50 per metric ton of emissions in 2019 to increase annually by two percent, while the Healthy Climate and Family Security Act sets a declining cap for carbon dioxide emissions leading to a reduction of 80 percent below 2005 levels by 2050. As a cap-and-dividend measure, the Healthy Climate Act sees the returns originating from the auction of permits going in equal amounts to every U.S. resident with a valid social security number. In a slightly different way, the Carbon Fee Act requires that the revenue generated from the tax be used to give individuals an annual $800 refundable tax credit, meaning that the carbon tax revenue would be subtracted from the amount U.S. citizens pay for taxes.
Both bills envision some kind of return, or benefit for U.S. residents and taxpayers from the collection of pollution-related fees. The proposers of these bills stressed the importance of the market approach to entice both energy producers and consumers. Senator Schatz, co-sponsor of the American Opportunity Carbon Fee Act, commented that “market-based solutions have support across the ideological spectrum,” and Senator Whitehouse pointed out that a carbon fee is a solution most economists agree is necessary in order to counter GHG emissions. (1)
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