My thoughts on Initiative 732, Washington’s proposed carbon tax

There’s been a lot of ink spilt about the CarbonWA proposal to introduce a carbon tax in Washington State. Most environmental groups are part of the Alliance for Jobs and Clean Energy and are not supporting I-732, which is somewhat surprising. After a short search, the only long-standing organizations I could find that support I-732 were Audubon and Sightline (for those who want a more in depth analysis, I strongly recommend Sightline’s three part series). My goal here is to give a brief description of I-732, describe why some people don’t support it, and give my personal thoughts to its strengths and weaknesses. My conclusion is I think you should vote for it (unless you think that climate change isn’t real, in which case, go jump in a lake that used to be a glacier).

Yes on I-732

 

What is I-732

I-732 is an economists idea of the perfect policy to address climate change. That’s because it was written by  economist Yoram Bauman. One basic tenet of economics is that if you tax some behavior you get less of it. Most of us call that a sin tax, but economists like to name things after economists, so they call it a Pigovian tax. If you want fewer people to smoke, tax cigarettes. So if we want fewer carbon emissions, tax carbon emissions and that will reduce carbon emissions. It doesn’t matter what you do with the revenue: you can reduce other taxes; fund schools; improve health care; train displaced workers.

If passed I-732 will institute a tax on carbon emissions of $25 per metric ton of CO2 emissions. Going into the future the carbon tax will increase by more than the rate of inflation. This will increase the cost of a gallon of gas by about a $0.22 in the beginning, growing to about $1 a gallon by mid-century. Since our electricity supply is heavily hydro and coal is already slated to go away, this would have a similarly minor role in the cost of electricity.  This part of the equation gets high marks from anyone who’s looked at it. High enough to be meaningful, low enough to not cause unreasonable disruption, and ramping up over time in a predictable fashion, which encourages good thinking when major investments are being made (e.g. when you buy a car you’ll factor in the increasing carbon tax before it hits).

So what to do with the money raise, predicted to be about $2 billion in 2019? The authors of I-732 decided that the goal of was to be revenue neutral. Three taxes would be reduced by the same amount that the carbon tax raises:

  • The state sales tax drops by one percentage point.
  • Fund the Working Families Rebate to provide up to $1500 a year for 400,000 low-income working households.
  • Effectively eliminate the B&O business tax for manufacturers.

The result would make the most regressive tax system in the US  less regressive and protect manufactures who might be put at a competitive disadvantage by the tax. There’s some reasonable discussion about whether the result would actually be revenue neutral. This question is impossible to fully answer, since we don’t know what future CO2 emissions will be. Sightline’s conclusion was that as best as anyone can forecast, this is reasonably revenue neutral. If our legislature does it’s job (OK, stop laughing, this isn’t funny), any shortfall can be made up as it happens.

Why most environmental groups don’t support I-732

In a nutshell, it’s because they don’t think it should be revenue neutral. The money could go to education, which is horribly underfunded, or to support communities disproportionately affected by climate change like a coastal community that needs to be relocated. It could go to worker training, especially for workers displaced as we move to a low-carbon future. It could be used to solve a host of problems that the state isn’t currently funding.

There’s also a feeling that the CarbonWA team didn’t engage the community. When I worked on an initiative to create a renewable portfolio standard requiring almost all utilities to get 15% of their electricity from non-hydro renewables, the process of writing the initiative involved over a year of meetings and negotiations with hundreds of stakeholders. What resulted was not the policy that I would have created, but it was one I could support. That’s how everyone felt. There was a critical stakeholder who said “eh, OK, I won’t fight this” and that was a victory.

The CarbonWA team writing the initiative was small and they didn’t fully engage the community. They put forward a proposal with nothing for the labor unions and little for those concerned about environmental justice. Without the support of those groups,  most of the mainstream environmental groups walked.

Why the Association of Washington Business (AWB) opposes I732

The No on I732 campaign is led by the Associate of Washington Business, which is a far-right group of alien reptile creatures walking around in Men’s Wearhouse suits and the skins of those they’ve consumed to feed their unending hunger. They think that all taxes are bad, even those that replace other taxes. They don’t fight to create a good tax system, that would be like fighting to get a better form of cancer. Our schools should be funded by churches and other charitable organizations (I assume, since they’re against all taxes). Fire departments should be voluntary organizations that only put out the fires of their members.

The irony is I-732 was written to attract people on the right who don’t want to see additional government programs. I-732 doesn’t pick winners and losers, it doesn’t funnel money to job training programs that support the unions. All it does is tax carbon emissions and let Adam Smith’s invisible hand do the work. It’s a very right-wing policy (which doesn’t necessarily make it bad).

I-732 is an example of people crafting policies with the hope of attracting support from people on the right, and then not getting it. We should just draft what we think is good policy and fight for that. The best example of this is the Affordable Care Act not including the Public Option (i.e. allowing people to buy into Medicare). It was thought that if the public option was included, no Republicans would vote for the ACA. So it wasn’t included and no Republicans voted for it anyway.

Why I disagree with the Alliance for Jobs and Clean Energy

The Alliance for Jobs and Clean Energy asked the CarbonWA team to not submit their signatures and allow them to create a carbon tax initiative that was drafted by the Alliance. This policy would have been hammered out with environmental groups, labor unions, low-income communities, and others. They probably would have drafted a better initiative, if they ever completed it. The argument from the CarbonWA group, is that the Alliance had years to put something together and never did; why should the CarbonWA team not submit the signatures that they had worked hard to obtain. That would have been incredibly demoralizing to the hundreds of volunteers and it wasn’t a reasonable thing for the Alliance to even ask. It might have been reasonable if the Alliance had language for a counter-proposal, but that still doesn’t exist. Initiative 732 will accomplish what it set out to do:

  • Reduce carbon emissions in an economically efficient manner
  • Make our tax system less regressive

It will not train displaced workers, fund our schools, reduce crime, fund mass transit, or a whole host of great things that we should do. It isn’t supposed to do those things. But the two things it will accomplish are both good and important things and we should support them. Then let’s fight for an income tax (again) to fund our schools and make our tax system progressive, not just less regressive.

The reality is, without the support of the Sierra Club and other progressive organizations, I-732 will probably fail and fail big. And that’s unfortunate given the urgency of the problem.

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