This page summarizes some past efforts to increase energy taxes in the U.S.
Clinton Btu Tax (1993)
In 1993, the Clinton Administration proposed a general tax on all energy forms, as part of a broader deficit-reduction plan and also to promote energy conservation. The tax was to be levied on coal, natural gas, liquefied petroleum gases, gasoline, nuclear-generated electricity, hydro-electricity, and imported electricity, at a base rate of 25.7 cents per million Btu, with an additional 34.2 cents per million Btu on refined petroleum products. Opposition was broad-based, ranging from oil companies and farmers to major energy-users such as aluminum corporations and their advocates at the National Association of Manufacturers. The "Transportation Fuels Tax" became law on Oct. 1, 1993, but not as the broad-based tax originally proposed. As enacted, the law imposed an average tax of 13.814 cents per gallon on gasoline, diesel, and special motor fuels. See TED Case Study.
Perhaps the most important legacy of the 1993 Btu tax proposal has been to discourage elected officials from seriously considering higher levies on fuels or even fuel-based emissions. Indeed, as Gristmill’s Dave Roberts reported, Bill Clinton himself, addressing the National Clean Energy Summit in August 2008, said he supports pricing carbon via a cap-and-trade system because "I tried [a carbon tax] once. It didn’t work for me." Unfortunately, the former president passed up an opportunity to draw lessons from the 1993 failure. One evident lesson is that any carbon tax proposal should be revenue-neutral. A second is that a tax must be comprehensive and not allow the smorgasbord of exemptions that weighed down the 1993 proposal.
Minnesota Carbon Tax (mid-1990s)
In the 1990s, energy activists in Minnesota led in part by the Institute for Local Self-Reliance undertook an effort to enact a billion-dollar state "tax shift" to raise energy prices while reducing taxes on income and/or property. The proposal was debated extensively but was never enacted into law. The Institute has archived key documents in support of the initiative, including testimony, fact sheets, economic analyses and draft legislation. Click here.
Other State Initiatives
The State Environmental Resource Center compiled brief accounts of past carbon tax initiatives in Minnesota and five other states: CA, MD, OR, TX, VT. Although SERC has ceased operation (its office is now the Wisconsin office for Defenders of Wildlife), their helpful page may still be accessed here.
John Anderson 50-50 Tax (1980)
In August 1979, Rep. John Anderson (IL) called for a 50-cent-per gallon energy conservation tax on motor vehicle fuels to reduce consumption and dependence on foreign oil. He proposed using the revenues from the tax to reduce payroll taxes by 50 percent, increase Social Security benefits, compensate those who were not on a payroll and thus not subject to the payroll tax, exempt farmers and allow tax credits for businesses "unfairly penalized." Campaign Brochure. In making his proposal, Congressman Anderson was not naive about the politics of proposing a gas tax:
"I am under no illusions regarding the popularity of this tax," he acknowledged, and went on to state, prophetically, "But higher gasoline taxes in this country are unavoidable. We have no choice. Either we tax ourselves by means of a gasoline tax, or OPEC will tax us in the form of higher and higher prices for crude oil." Sept. 11, 1979 news clipping.
At that time, of course, the importance of taxing fuels other than gasoline to reduce emissions of CO2 emissions was not yet recognized.