CarbonWA’s tax: Bold, compelling policy but not revenue neutral
CarbonWA, a group of passionate and engaged volunteer citizen activists, has been collecting signatures to place a revenue neutral carbon tax before the 2016 Legislature and potentially the voters. It now appears they have reached the required number of signatures. The group’s impressive, fierce resolve to elevate the dialogue in our state about carbon pricing is admirable, timely and meaningful. They have effectively and forcefully altered the discussion about how to reduce global carbon while improving our state’s quality of life in compelling ways for real people living real lives. They have moved the dialogue further politically than anything else and deserve credit for it.
The problem, as indicated in the Seattle Times, is that despite their impassioned and responsible work, the fiscal details of their plan are struggling to match the public narrative. My personal and professional hope is that the broader environmental community can unite with CarbonWA behind a stronger, more coordinated approach that harnesses the power of a carbon pricing mechanism economically with the political imperative to move forward successfully.
An independent staff fiscal analysis, prepared at my request in my most recent role as Finance chair, of the implications of CarbonWA’s proposal on the operating budget of the state shows that it is not, in fact, revenue neutral. The plan would amount to a reduction in overall state revenues of $675.4 million over four years. This is broken down into the 2017-2019 biennium at $94.5 million and the 2019-2021 biennium of $580.9 million.
The three parts of the carbon tax proposal (business and occupation, retail sales tax and Working Families Tax Credit) are listed here in detail.
The plan is not neutral on fiscal policy. The choice of spending $250 million a year on Working Family Tax Credit is a big policy move, as is deduction in sales tax and preferential B&O taxes that may struggle to work effectively. I do not criticize the moves but I do think we need to more rigorously analyze the options for systemic reform, and to incorporate the ideas into a broader framework. This is one more reason why I appreciate CarbonWA’s approach to submit the plan to the Legislature despite the uncertainty that it entails. Given the lack of passion for climate action from Olympia overall, it could easily take a turn for the worse not just the better. It’s a gamble but no more so than allowing silence to define our political inaction on climate change.
Through all the noise the Legislature has the ability to modify the proposal or send this specific plan forward to the voters in 2016.
Pricing carbon is good policy not merely because it reduces climate impacts, but because it reduces the taxpayer’s subsidy of fossil fuels that hides the true cost to society. In straight economic terms, economists on the left and right are coming to see the importance of ensuring fossil fuel products realize the true externalities of their own impacts.
We can honor the work of the CarbonWA team that successfully pushed the agenda forward while uniting behind a broader coalition to pass meaningful policy in our state. But we can only do so together.
There will come a time when young people of the world push, prod and agitate for meaningful change of our environmental policies. That time is now. We can do better. Together. Our failure in this area isn’t merely political or policy. It’s moral.
Your partner in service,
NOTE: The masthead of this blog reads “State Senator” although at present I am a member of the House of Representatives. It has been updated logistically prior to Jan. 7, 2016 when I am expected to be appointed to the state Senate. Please accept my apologies for any confusion or offense at the inaccurate title.