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Oregon Looks to Adopt Carbon Tax

J. Mijin Cha

Momentum for a carbon tax is not just building on the federal level, states are looking at the idea, too. Currently, Oregon's legislature is considering four carbon tax-related bills and Governor Kitzhaber, along with California Governor Jerry Brown and Washington State Governor Cristine Gregoire, has also stated his support for the idea. A recent study released by Portland State University looks at what a carbon tax would do for the state's economy and tax burden and finds that a $30 per ton carbon tax would raise $1.1 billion in 2015. If the state followed British Columbia's lead, the tax would increase over the years and by 2025, a $60 per ton tax would bring in about $2.1 billion to the state.

Oregon, in particular, would benefit from the steady revenue brought in by the carbon tax because the state does not have a sales tax. By adopting a carbon tax over a sales tax, the state helps shift the tax burden onto polluters and protects working and lower income communities. Sales taxes are regressive and hit lower and middle income populations harder than higher income brackets. A carbon tax formulated to protect lower and middle income families is a far more fair system than raising revenue through a sales tax.

The PSU study also found that if 10 percent of the carbon tax revenue was reinvested in energy efficiency and transportation infrastructure projects, nearly 2,800 jobs could be created. Not to mention, these investments would help the state meet its climate goals by further reducing its carbon emissions. The carbon tax would already reduce emissions by 34 millions tons in 20 years.

Hopefully, momentum behind a carbon tax will continue to increase. As we've written, it's a win-win-win policy that raises revenue and cut deficits, reduces greenhouse gas emissions, and shifts the tax burden onto polluters. Oregon's proposal is even higher than the what's being discussed federally ($30 per ton vs. $25 per ton). We should follow the state's lead on this one.