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Congressional Proposal for a Carbon Tax Open for Comments

J. Mijin Cha

We've talked a lot about how a carbon tax is a win-win-win proposal that would raise badly needed revenues, lower greenhouse gas emissions, and shift the cost of pollution onto the producer. It looks like some members of Congress are ready to take this step. Today, Rep. Waxman, Sen. Whitehous, Rep. Blumenauer, and Sen. Schatz released draft-carbon pricing legislation and are soliciting feedback on their proposal. Under their propsal, the EPA and the Treasury Department would be responsible for assessment and collection of the carbon fees. EPA's database of reported emissions would determine the amount of pollution subject to the fee and Treasury would collect and handle the fees.

In particular, feedback is being solicited on the following four questions:

1. What is the appropriate price per ton for polluters to pay?  The draft contains alternative prices of $15, $25, and $35 per ton for discussion purposes.

2. How much should the price per ton increase on an annual basis?  The draft contains a range of increases from 2% to 8% per year for discussion purposes.

3. What are the best ways to return the revenue to the American people?  The discussion draft proposes putting the revenue toward the following goals, and solicits comments on how to best accomplish each:  (1) mitigating energy costs for consumers, especially low-income consumers; (2) reducing the Federal deficit; (3) protecting jobs of workers at trade-vulnerable, energy intensive industries; (4) reducing the tax liability for individuals and businesses; and (5) investing in other activities to reduce carbon pollution and its effects.

4. How should the carbon fee program interact with state programs that address carbon pollution?

The Congressional Research Service estimated that the deficit could be cut in half by 2020 with a carbon tax of $20 per metric ton. Higher prices would obviously generate more revenue and as long as there were strong protections against high spikes in energy costs for low-income communities, it could provide steady revenue streams for investing in renewable energy and transitioning the carbon-based workforce.

While it will likely be politically impossible to move a carbon tax through this Congress, thinking through what a proposal should include helps set the stage for when there can be political movement. Comments can be submitted by email to [email protected].