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Why Washington State's Carbon Tax Measure Is a False Promise for Climate Justice


#1

Why Washington State's Carbon Tax Measure Is a False Promise for Climate Justice

Jill Mangaliman

1. Urgency is not an excuse to get it wrong


#2

In this article Mangaliman does a great job of addressing the concerns environmentalists and progressives have about I-732.

An additional concern are the reductions in sales/excise and business & occupation (B&O) taxes in a state that has no income tax (and has had one of the most regressive tax structures of the 50 states for decades), creating a taxation environment that will give Boeing and other carbon intense industries more B&O tax cuts than they would pay in carbon taxes, thereby shifting even more burden on middle and low income citizens.


#3

Go Jill! Thanks for writing this rebuttal of The Stranger endorsement, and thanks Common Dreams for republishing it here.

It's super sad that some economist sits down and writes his "revenue neutral" carbon tax initiative and gets it on the ballot, and the main argument that endorsers like The Stranger have is "Do Something!" even though this something is the wrong thing.


#4

Sierra Club also rescinded its initial support of I-732 after realizing that it was a smoke screen to give corporations operating in the state a HUGE tax break and overall creating HUGE state deficits. Washington State has also been ahead of the national curve in its efforts at reducing carbon emissions. Besides, as the author of this piece brings out, it is a very poorly written (content and purpose) initiative. I voted NO and have urged everyone I know to do the same. May I-732 fail miserably!


#5

Washington's state sales tax is the largest and most regressive component of the state's supremely regressive tax code. Any price on carbon likewise would be regressive. I-732 uses about two-thirds of the carbon tax revenue to reduce the sales tax, and thereby prevent the state's tax code from becoming even more unfair to the poor.

One strength of the carbon tax is that everyone, people and businesses alike, has to pay it on the fossil fuels they use, and a corresponding strength of the sales tax reduction is that everyone, even a migrant farmworker, receives some relief in return. Because the sales tax is regressive, lower-income households receive a proportionally greater benefit from its reduction.

I-732 uses a further portion of the carbon tax revenues to fund a 25% match of the federal Earned Income Tax Credit (EITC). In 2015, 448,000 households in Washington qualified for an average of $2,145 from the EITC, so I-732's 25% match would raise that average by $536, the most progressive tax reform in Washington since a ballot initiative in 1977 exempted groceries from the sales tax. Together, the sales tax reduction and match of the EITC account for about 80% of the carbon tax revenues.

The remaining 20% of the package is intended for what the state calls "energy-intensive, trade-exposed" businesses, those that would face a competitive disadvantage against out-of-state businesses that don't have to pay a carbon tax. Is 20% too much? I don't know, but making the state more attractive to clean businesses seems worthwhile.

Is Mangaliman claiming that putting a price on carbon suddenly doesn't matter? What about Sweden's experience? "Our carbon emissions would have been 20% higher without the carbon tax," says the Swedish environment minister, Andreas Carlgren...."A carbon tax is the most cost-effective way to make carbon cuts and it does not prevent strong economic growth," adds Carlgren.

As for British Columbia's carbon tax, it has been successful in reducing per-capita emissions, but the population of British Columbia also has increased by about 7% since the tax began in 2008.

Fifty scientists at the University of Washington have issued a plea for I-732. They base their plea on their belief that it would be effective at reducing emissions: "While many interrelated social and environmental needs demand our attention, complex problems are best solved one step at a time. I-732 is a simple step in the right direction."

On the other side, American Fuel and Petrochemical Manufacturers seems to agree, because last week they gave a quarter million dollars to the No campaign. The coal industry also is worried: “It would have a devastating impact — it would eliminate the use of all fossil fuels,” Robert E. Murray, the chief executive of Ohio-based Murray Energy Corporation, said of a national carbon tax modeled on the Washington proposal.

Regarding I-732's effect on the state's tax revenue, Seattle's Sightline Institute published a comprehensive analysis that concluded, "I-732’s net impact on state tax revenue is almost certainly within the margin where all we can say for sure is it is very close to revenue neutral...By current estimates, I-732 will likely have less than a 1 percent impact on state tax revenue for decades. If the Department’s annual report shows the swap drifting too far from neutral, it will be the legislature’s job to tweak the tax cuts so as to carry out the people’s intent of a revenue neutral carbon tax".

When I think about climate justice, I think about countries such as Bangladesh, where eighteen million people are going to lose their homes to rising seas over the next thirty years. The US has emitted more than a hundred times the greenhouse gases that Bangladesh has, and the per-capita emissions by the US are still over ten times those by Bangladesh. Even Europe has only half the per-capita emissions that the US does. I imagine Americans demanding climate justice only for themselves must sound ridiculous to a Bangladeshi.

I believe Mangaliman's group and others like it are using identity politics as a disguise for greed, and they are so self-absorbed as to obstruct an attempt to address America's debt to the rest of the world because they want a piece of the action. These groups don't care that the revenue from a price on carbon would come disproportionately from the poor: they want it for themselves. That 80% of I-732's revenue would go toward progressive tax reforms doesn't matter to them because they want to control it, and to gain the power that comes from controlling it.


#7

I found several aspects of it disturbing / disingenuous.
The budget "hole" argument is nonsense, as you add up 6 years of estimated deficits to produce a "really big number" to scare people, as progressive economist Dean Baker always points out. With WA's projected annual budget in excess of $20 billion per year for this forecast period, this measure is revenue neutral (+/- 1% of the state's budget) within anyone's ability to forecast it. Also, fuel use per capita didn't decline markedly in any part of Canada but BC, when BC's carbon tax was put in place. The economy and population where growing in the meantime. When you ignore this argument for the measure's effectiveness you damage your credibility. When you find yourself in a hole, first stop digging; looks like they've done at least that.
Obviously, this issue will only gain urgency in the times ahead, but we need to get the ball rolling, and we need to do it now.
I look forward to joining your efforts to modify or replace this measure when a better, concrete, proposal is on the table, but for now I will now go out and work to pass, and vote for I-732.


#8

Identity politics has nothing to do with this.

The arguments here are bogus. Investments in public transit will only start when high fuel prices drive a demand for better transit and also when people start using what service is available instead of just complaining.

And boy, my comment in a previous article about the left screaming about the economic necessary consequences of their own advocacy (in that case, banning pipelines while doing nothing about oil demand) is sure being proven here. Take this medicine! Take this medicine! Take this...bleeeeach!

Can't at least this measure be passed by the voters, then improvements to Washington's worst-in-the-nation regression in taxation be fixed separately? Becasue such a measure as this I-732 would be totally, utterly out of the realm of the possible where I live - you don't know ho good you have it out there in "Cascadia"

And we ALL live in the front line of climate change! Please take you self-absorbed, typical west-coast-ian anti-solidarity, identity-narcissism somewhere else! Come her to dug-up, drilled-up fracked up, but nontheless Trump-loving Pennsylvania and West Virginia (or maybe just your own state's extremist right-wing parts starting jsut east of Snoqualamie Pass) if you want to see a "front line".


#9

If I-732 was the first example of flawed tax and energy policy in WA, I would be all in supporting it. Having experienced more than a quarter century of flawed WA tax and energy policy first hand, the "better than nothing" argument that WA electeds and many of their supporters serially echo is worn too thin to take out for another road test.