Debate on I-732: Carbon Tax Initiative
Thursday, October 20th, the Foley Institute and the Hoops Institute of Taxation Research and Policy at the Carson College of Business co-sponsored a debate regarding I-732. This initiative concerning Washington’s Carbon Emission Tax and Sales Tax Reduction will be on the ballot this election cycle.
Director of the Hoops Institute, Dr. Jefferey Gramlich, moderated the debate between Yoram Bauman, Sen. Doug Ericksen, and Jeff Johnson. Background on I-732 was given by Dr. Gramlich in an effort to educate the audience on this initiative– the first of its kind to be on any state’s ballot. Dr. Gramlich showcased NASA research finding extreme growth in carbon dioxide levels and global temperature averages. To explain the wording of the ballot, Gramlich highlighted a few main points: the tax will only apply to carbon emitting sources of energy; the tax would begin July 1, 2017 at $15 per metric ton, increasing to $25 per metric ton July 1, 2018, and subsequently growing to $3 per metric ton annually; to offset the tax, the initiative plans to cut sales tax half a percentage point in 2017 and a full percentage point in 2018. Additionally, there will be a low income family rebate that I-732 plans to match with the federal earned tax credit.
Founder of Yes on I-732, economist Yoram Bauman, spoke on the “moral obligation” of voters to act on climate change. Bauman admitted that this initiative would not completely solve the effects of climate change in Washington State, but it will “set the stage for national and international action” and is the “biggest step forward” in tax progression on the issue in 60 years. This policy, Bauman explained, is written with a “financial incentive” to behave sustainably: businesses will find a reduction in taxes in order for Washington to stay competitive. While Bauman advocates for voters to pass this initiative, the other two panelists disagreed for a variety of reasons.
Jeff Johnson, president of the Washington State Labor Council, supports the need for climate change focused policy, but believes I-732 is not the proper initiative for successful action. “There needs to be equitable and just transition with the least disruption in peoples’ lives.” Johnson finds that the lack of revenue from I-732’s design to only tax the market price of carbon dioxide will not result in successfully reducing carbon emissions. “Price alone is not enough,” Johnson stated that policy must be created with plans for positive revenue outcomes in order to “help leverage investments in clean energy and infrastructure for transitions.”
While the initiative claims to be revenue neutral, Johnson claimed “an $800 million deficit will occur if I-732 passes.” The result? A fight for funds between “long term health care against education, transport, mental health” and now climate change mitigation. Additionally, Johnson stated that of the current working low income families that qualify for rebates, nearly 53% have never received the credit they have been promised, begging the question of I-732’s true impact on this community. “Taking a centrist approach is wrong,” according to Johnson. The writing, he explained, was never adjusted by the legislature and needs to result in actual revenue to then invest in.
Unfortunately, unlike his co-panelists, state Senator Doug Ericksen (R- Whatcom County) did not have the individual platform to speak from due to flight delays resulting in his late arrival. As a representative of a district with businesses in energy fields, Senator Ericksen explained his concern that increasing already heavy taxes on oil will prompt job loss as companies flee to less taxed states. “If your goal is increase taxes on oil, congratulations, we’re already one of the most taxed states. To refine a barrel of crude oil in Washington is 2.2 times more expensive than to refine it in California.” Just as Jeff Johnson interpreted the initiative to act “too clowly” in mitigating climate change, Senator Ericksen asked the question of the true impact of the policy. “How will the effects of I-732 be measured? When will we see results?” In response, Yoram Bauman concluded the potential for this policy to generate action on the larger scale as more states could be inspired to implement similar policy.
Contributor: Shantara Pintak