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Washington Is Getting Close To Enacting The First Carbon Tax In The U.S.

If it can agree on the tax it wants...


Illustrations: agsandrew via Shutterstock

Many economists and environmental campaigners think carbon taxes are the best way to fight climate change. By putting a price on carbon, you're dealing directly with the problem of climate change, and you're making what you're doing transparent so everyone understands. The trouble is, people tend to disagree about whether these taxes should be "revenue neutral"—i.e., that other taxes should be reduced when the carbon tax is enacted—or whether the money generated should go towards other climate-fighting measures, like investing in renewables.

This argument is currently playing out in Washington State, where two groups are battling over what type of climate measure the state should adopt this year.

In early January, a campaign group called Carbon Washington submitted 362,000 signatures in support of a "revenue-neutral" carbon levy. Modeled after British Columbia's successful eight-year-old tax, the measure would place a $25 charge on a ton of fossil fuel-related carbon emitted in the state (or on electricity imported from outside). Revenue generated would go towards a 1% reduction in sales tax, and an earned income credit for as many as 400,000 low-income families.

In effect, the tax would mean a 25 cent increase on the price of gasoline, or a 2.5 cent increase on a kilowatt hour of coal-fired electricity, according to Carbon WA. But those increases would be offset by reductions in other taxes and there would be help for people who can least afford tax increases.

To Yoram Bauman, an economist-turned-stand-up comic who leads Carbon WA, revenue-neutrality is a way to build a broad coalition. You win people who care about climate change as well as more conservative types who don't want to raise taxes overall. But another group called the Alliance for Jobs and Clean Energy argues that revenues should go towards clean energy investments, schools, and other priorities. It also says Bauman's idea isn't "viable" according to polling.

Washington lawmakers will now consider the carbon tax plan. They could pass it as is, amend it, or reject it. If they reject it, which is likely, it will become a ballot measure this November. The Alliance, which is made up of unions, climate justice groups, and some businesses, is set to decide on its specific tax proposal in the next few weeks, according to a spokesperson. A policy document calls for "significant investments in clean energy" and for at least 25% of revenue generated to go to disadvantaged communities "disproportionately impacted by global warming."

In December, the two sides almost reached a compromise and agreed to work together. But Bauman says he wasn't prepared to back down on the principle of revenue neutrality. "I don't think we should use climate change to grow the size of government," he says. He calls the Alliance's proposal, though not fully formed, a means to "unite the left" as much as a climate measure in its own right.

From the outside, it seems a shame people who care about climate change can't come together on how to solve it. A compromise proposal of some sort would be better than a losing proposal of no sort.