For the past three years, Washington state has been the epicenter of carbon tax political action.
In 2016, activists placed a carbon tax initiative on the November ballot that would have given Washington the nation’s first state carbon tax. The measure, I-732, was soundly defeated, 59% to 41%.
Much of the opposition to I-732 came from the Alliance for Jobs and Clean Energy, a coalition of environmental and social justice organizations. A key concern of the Alliance was how the tax revenues would be used. Under I-732, most of the revenue would have been used to cut other taxes including the state sales tax. The Alliance preferred to see money spent on environmental and community needs.
This year the Alliance has gotten its own carbon tax initiative, I-1631, on the ballot. The new proposal differs from I-732 on both the tax and the revenue sides, and the Nov. 6 vote may tell us something about relative support for the revenue-neutral approach (I-732), compared to spending the money on potentially popular programs (I-1631).
Under I -732, the carbon tax would have hit $25 per metric ton of CO2 in 2018 and risen annually at a rate of 3.5% plus inflation after that. I-1631 would start lower—$15 per metric ton—but rise faster, at $2/ton plus inflation annually. To avoid adverse economic impacts, I-1631 exempts energy-intensive and trade-exposed businesses such as the behemoth aircraft maker Boeing, Inc. from the tax.
Proponents expect the I-1631 carbon tax to raise $1 billion in the first year, and $2.5 billion over the following three years. (The decline assumes that businesses and households reduce their emissions as time goes on.)
I-732 would have used the carbon tax revenue to:
- cut Washington’s state sales tax — one of the nation’s five highest
- cut the corporate business tax
- fund a state income-support program for low-income households
I-1631 specifies three areas of spending, instead:
- 70% dedicated to clean air and clean energy projects, including specific funding for low-income residents and support for fossil fuel workers who must transition to new jobs.
- 25% for projects to increase the resiliency of water and forest resources
- 5% to help communities, including tribal communities, prepare for the consequences of climate change
In a nod to perceived public misgivings about government (a point often raised in defense of revenue-neutral carbon tax proposals), I-1631 establishes a Public Oversight Board to determine how funds will be used. The legislature’s role is limited to oversight through its Legislative Audit and Review Committee.
The initiative has the support of Washington Governor Jay Inslee, a self-declared climate hawk whose efforts to enact a carbon tax through the legislature were barely defeated by the Republican majority. It also faces a well-funded opposition backed by oil interests. According to the Yes on 1631 campaign, the opposition had raised close to $9 million by late August, and final spending could be two to three times that amount.
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