Why I-732, the Carbon Tax Initiative, is a Win for Everyone

It is not often that a measure comes before the public that is wise, bipartisan, environmentally progressive, and helps address income inequalities in our State.

A measure of such immense promise that it could have profound, and very positive, impacts both in Washington State and around the nation.

What am I am talking about?  Initiative I-732, the revenue-neutral carbon tax that will be put to Washington State voters in November.

The key idea is to tax something that we don't want (carbon emissions into the atmosphere),  using the money to make our State tax structure more fair and less regressive (mainly by reducing the State sales tax).

Why don't we want more carbon in the atmosphere?  Because it is clear that increasing CO2 will lead to a much warmer atmosphere and a number of environmental disruptions.

For all the talk about climate change, mankind is doing very little to stop global warming.

Don't believe me?   Here is a plot of CO2 concentrations in the atmosphere for the past half-century.   You see much progress?  I don't.  In fact, the growth rate of CO2 concentrations is increasing.  We need to do more.  Much more.

I-732 is patterned after the proven and highly successful carbon tax in British Columbia and will:

1.  Establish a 25 dollar per ton tax on carbon emissions associated with fossil fuels.
2.  Reduce the sales tax by a full percent.
3.  Provide a Working Families Tax Rebate to provide up to $1,500 a year for 460,000 low-income households
4.  Lower the Business & Occupation tax on manufacturing to 0.001 percent of gross receipts, effectively eliminating the tax.

I-732 is designed to be revenue neutral, so that the money collected by the carbon tax is used to reduce other taxes.   Government will not grow as a result.

I-732 is extraordinary good policy for a number of reasons:

1.   It taxes what we don't want, and lets the market decide on the best approach to reducing CO2 emissions.  Much more effective than government micromanaging the economy or deciding winner/losers.  Folks on both sides of the aisle support this approach.

2.  It will reform the Washington State tax structure, one of the most regressive in the nation (no income tax, high sales tax), making it less onerous for low-income folks.  

3.  It will essentially eliminate the Business and Occupation tax on manufactures, which is a real burden to small and upcoming businesses.

A Bipartisan Example for the Nation

 I-732 would be the first bipartisan effort in the nation for addressing global warming from fossil fuels through a carbon tax.

It would be an influential example to the nation, showing that all sides of the political spectrum can work together to address a major environmental threat.

Environmentally minded conservative folks like I-732 because it lets the free market decide on how to solve the problem, while not putting a net tax on society.    Government doesn't grow.  

Environmentally minded liberal folks like I-732 because it deals with carbon pollution, while making our tax system less regressive.    Everyone wins.

Democrats and Republicans, include a number of major regional politicians, support I-732, as do free-market thinkers like Todd Myers of the Washington Policy Center. Recently, environmental policy experts at the Sightline Institute concluded that  "I-732 would launch Washington to a position of global leadership on climate action."  

The list of supporters of I-732 is long and deep, including major local leaders such as Congressman Jim McDermott, Mike McGinn, Ron Sims, Republican State Senators such as Mark Miloscia and Steve Litzow, environmental groups such as the Audubon Society and the Olympic Climate Alliance. And many more.

The Opposition

Unfortunately, there are some folks, generally on the far right and left, that don't support I-732.  Hopefully, reflection and facts will change their minds.  Why are some folks against I-732?

Some on the conservative side of the political spectrum don't believe that global warming is a threat and that humans could not possibly have a significant impact on the global atmosphere.   Their conclusions are wrong and are contradicted by the best science.

"The concept of global warming was created by and for the Chinese in 

order to make U.S. manufacturing non-competitive"

Others worry about the impact on business, particularly heavy energy users. These include the Association of Washington Businesses, the Washington Truckers Association, some of the pulp and paper manufacturers, and a few farm groups.

These groups are mistaken. I-732 is BOTH pro-environment and pro-business. It offers predictability for energy costs, without government intervention. Economic analysis by Regional Economic Models, Inc. (REMI) found that by 2020 Washington, I-732 would stimulate a net increase of over 15,000 jobs, and an enhancement in WA annual GDP of over $500 million. The state Office of Financial Management also projects that I-732 will increase retail sales and other business activity.    I-732 essentially removes the B & O tax for manufacturers and there is  a 40-year phase for taxes on agricultural fuels.

In short, I-732 will be good for business.

There are those on the left side of the spectrum, who oppose I-732 because it is revenue neutral.   These folks have nothing against a carbon tax but they reject revenue neutrality.  They want to use the revenue from a carbon tax for government programs (such as supporting renewable energy efforts) and to assist low-income folks, who they believe are preferentially hit by climate change.

But there are problems with their approach.  Government has  a very poor track record in supporting winners and losers in the energy sector (consider the 500 million lost by supporting solar cell manufacturer Solyndra).    More seriously, removing revenue neutrality will undermine the ability of the measure to be bi-partisan (it would destroy support by Republicans and conservatives).

There is no way major progress can be made on reducing greenhouse gases in the U.S. without the support of both Democrats and Republicans.   Furthermore, there is little evidence that greenhouse gas warming is preferentially hurting low-income folks in WA State, and, in any case, I-732 will reduce the sales tax and provide a working families rebate that will greatly aid low-income individuals and families.

A major failure, costing half a billion dollars, that should not be repeated.

In short, the "progressive" and "left-leaning" folks opposed to I-732 should reconsider the issue and understand that I-732 supports their environmental and social agenda, while dealing with the issues of others on the political spectrum.
Groups that need to reconsider their opposition include some labor groups, social actions groups such as the "Alliance for Jobs and Energy" and the Sierra Club.   Governor Inslee, who says he is passionate about dealing with climate change, needs to get on board (the Democratic party is split on this issue).  They need to decide whether their top priority is to protect the environment or grow government.  They can't have both.

There are those who oppose I-732 because an initial analysis by the WA State Office of Financial Management concluded that the initiative would reduce state income by about $200 million a year.  This is a red herring.  First, this estimate is based on false assumptions and is incorrect.   But even if they were correct, this amount is nearly in the noise level (less than 1% of the state annual budget) and corrections could easily be made by the state legislature.

Finally, there are those who say "why bother"?   Washington State is only a small part of the problem, they suggest.  We are already fairly energy efficient because of massive hydro resources.  My answer to this (reasonable) question?

Everyone is a small part of the problem and thus everyone needs to act.  Only if everyone does their part (in reducing carbon emissions) can we make real progress in dealing with global warming.  This is related to the well-known concept of the tragedy of the commons.

Our effort will be an example to the nation and hopefully will stimulate progress towards a national carbon tax, which could have a MUCH larger impact.  And folks around the world look to the U.S. for leadership;  thus, our progress could have global impacts.

I-732 would represent a bipartisan effort, thus demonstrating that folks of all political beliefs can work together for critical environmental needs.  It has happened before (the bipartisan Clean Air Act of the 70s).  It could happen again.  The U.S. has proven time and again that we can do amazing things when we work together (like travel to the moon).

Read more here: http://www.theolympian.com/opinion/op-ed/article58570878.html#storylink=cpy

In summary,  I-732 is a chance for citizens of Washington State to make a meaningful step towards reducing carbon emissions, will make our State tax system fairer and less regressive, will foster business and economic activity, and will serve as a positive example to the nation of environmentally effective bipartisan action.

Announcement:  Climate Talk and I-732 Fund Raiser

On September 28, I will be giving talk  in Seattle on the Climate Surprise:  Unexpected Climate Impacts of Global Warming on the Pacific Northwest.  I will review the latest research and describe some  regional "climate surprises" that may well occur.   This talk will be sponsored by CarbonWa, the organization behind I-732, and will be a fundraiser for their efforts this fall.

To find out more or to secure tickets, please go here or  here (http://yeson732.org/uw/). There is both general admission seating ($20) and an opportunity to help further ($ 100, with a wine and cheese reception before).  Of course, even bigger donations would be very welcome and helpful.