Tags: washington | carbon tax | proposal 1631

Washington's Proposed Carbon Tax Is a Bad Approach to a Good Idea

Washington's Proposed Carbon Tax Is a Bad Approach to a Good Idea

Tuesday, 30 October 2018 04:27 PM Current | Bio | Archive

A state decision with important national implications will be made in early November. Washington voters will decide whether to charge a "fee" (really just a euphemism for a tax) for carbon emissions from fossil fuels.

Although taxing climate-destroying emissions would be an ideal way to reduce them, there are so many devils lurking in the details of the current proposal that one can hope that voters will reject it.

Proposal 1631 has three main problems. It hurts poor people the most. It allows the state to spend the money raised by the tax, giving politicians more favors they can do for arbitrarily selected interests. And the tax exempts major industries using lots of energy: a coal-fired electricity plant, aluminum smelters, aviation and maritime fuels, pulp and paper mills.

Opponents point out that this tax will substantially increase the cost of gasoline, heating homes and offices, and producing and transporting goods and services. Supporters of the measure claim that it won't increase costs all that much. But if it doesn't substantially increase prices, the tax would not reduce the use of fossil fuels and not reduce the carbon flowing into the atmosphere. The measure's supporters are talking out of both sides of their mouths here.

The whole point of a tax on carbon emissions is to force up the cost of fossil fuels, encouraging consumers and producers to shift to cheaper, ecologically responsible energy sources. Helpfully, taxes can be introduced at low levels and then gradually increased, minimizing the economic disruption caused by abruptly imposing a very high tax.

The Washington proposal, to its credit, phases in the proposed tax gradually. But its other elements remain deeply flawed. Since it would increase the cost of running cars and heating homes, it would hurt poor people more seriously than better off people. Depositing the revenues into government coffers — as done with regular taxes — increases the money politicians can divert to pet projects.

Both problems could be avoided by placing all carbon tax revenues into a trust fund rather than into the government treasury. The trust fund would be disbursed in equal amounts to the public — every man, woman, and child living in Washington — in a "social dividend" similar to the oil dividend now paid to Alaskans.

The combined effect of more expensive fossil fuels together with the social dividend would be to increase slightly the purchasing power of most poor people, whose dividends would be more than their extra costs for fuel and electricity. The very wealthy, who use more energy running their yachts, private jets, and McMansions, would find their purchasing power reduced, since their social dividend would be less than the extra money they are paying for fuel. For the average family, the extra energy cost and the social dividend would cancel each other out.

A carbon tax with social dividend would motivate people to use less coal, oil, or natural gas, while using more energy from other sources — atomic power, hydroelectric power, wind and solar, with the exact mix depending on which of these alternatives is most inexpensive. No heavy-handed, arbitrary — and probably wrong — government decisions about which alternate technologies could do the best job would be necessary.

We need to avoid public policies which offer politicians opportunities for corruption and favoritism for special interests. A properly designed carbon tax would be far preferable to the "cap and trade" alternative, in which government arbitrarily determines how many initial carbon permits to issue to each industry. But a tax which arbitrarily exempts selected energy-intensive industries, and which does not distribute the proceeds equally to the public, is no better.

Measure 1631 is so flawed that voters should and hopefully will shoot it down. If it wins, its harm to poor and middle class people may doom efforts to pass more sensible tax and dividend legislation in other states or for the U.S. as a whole.

But even in defeat, the measure may do major damage, planting in the minds of many voters the incorrect idea that a carbon tax is inherently a bad idea. This is regrettable.

Paul F. deLespinasse is Professor Emeritus of Political Science and Computer Science at Adrian College. He received his Ph.D. from Johns Hopkins University in 1966, and has been a National Merit Scholar, an NDEA Fellow, a Woodrow Wilson Fellow, and a Fellow in Law and Political Science at the Harvard Law School. His college textbook, "Thinking About Politics: American Government in Associational Perspective," was published in 1981 and his most recent book is "Beyond Capitalism: A Classless Society With (Mostly) Free Markets." His columns have appeared in newspapers in Michigan, Oregon, and a number of other states. To read more of his reports — Click Here Now.

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A state decision with important national implications will be made in early November. Washington voters will decide whether to charge a "fee" (really just a euphemism for a tax) for carbon emissions from fossil fuels.
washington, carbon tax, proposal 1631
Tuesday, 30 October 2018 04:27 PM
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