Summary of Draft Carbon Tax Legislation
Representative John D. Dingell
First off, this has a very serious framing problem ... "Carbon Tax". No, this is not a "tax". The air is a common heritage, what people will be doing is paying a fee for polluting the air that we all breath and the water we all drink and ... Like paying a dumping fee at the local trash dump, polluters should pay a FEE, not a tax!
The earth is getting warmer and human activities are a large part of the cause. We need to act in order to prevent a serious problem. The world's best scientists agree we need to reduce greenhouse gas emissions by 60-80 percent by 2050 in order to limit the effects of global warming and this legislation will put us on track to do just that.
This is true, sort of, but an incredible understatement of the facts.
* "human activities are a large part of the cause": truth, the primary cause, e.g., the majority (if not vast majority)
* "need to act in order to prevent a serious problem" Guess what, we have a serious problem. We, the Globe, are already seeing real impacts, serious problems. We must act to avoid catastrophic global impacts, that threaten the very concept of the American dream (along with so many other things.
* "60-80 percent by 2050": well, the top scientists are stating that 80 percent is a minimum target. The objective should be a Prosperous Climate Friend Economy (e.g., carbon neutral), with 80% a minimum threshhold
* "this legislation will put us on track to do just that" well, have to say, I don't quite understand how a carbon tax can assure that.
Now, to be honest, this serious understatement and weak language as to risk and scientific views concerns me.
This is a massive undertaking, and it will not be easy to achieve, but we simply must accomplish this goal; our future and our children's futures depend on it.
Yes ... truth ... truthful.
Is this, again, a strong enough statement? Is the necessary call to arms required to get Americans to support a carbon fee?
In order to get to this end we need to have a multi-pronged approach. In addition to an economy wide cap-and-trade program, which would mandate a cap on carbon emissions, a fee on carbon emissions is the most effective way to curb emissions and make alternatives economically viable.
Tend to agree, that there needs to be a "multi-pronged", holistic approach.
Note that the term "fee" is used here, rather than tax.
And, well, I tend to agree that a fee is "the most effective way" in terms of economic management.
Below you will find a summary of the carbon tax legislation I am working on. I invite you to commenton the proposal. Once I have received your comments, I will look at ways we can address the ideas and concerns brought to my attention by the American people.
This is just my first look at this. I plan to look again and comment. I hope that you will as well.
We must remember we all have a common goal and are in this fight together.
Taking this at face value .... YEAH!
If this is a serious effort to start a real discussion about best ways forward, fantastic.
I look forward to hearing from you.
Well, he will hear from me. You?
The legislation I am proposing would impose the following:
Well, is this legislation yet? I thought he was asking for our input, our comments before introducing legislation. Confused. ... Dizzy ... Uncertain ...
A tax on carbon:
$50 / ton of carbon (phased in over 5 years and then adjusted for inflation)
Coal, including lignite and peat
Petroleum and any petroleum product
Again, that tax line.
Now, this is actually sadly rather sloppy in its overall formulation.
Okay, this is a $50/ton taxation on carbon. Or, is it? In this case, this would translate to a $13.63 per ton of CO2
fee. (Due to the relative carbon and oxygen weights, divide CO2 by 3.7 to arrive at the carbon weight.) And, well, is that enough to have great meaning in changing the market. As per one of the comments below by NRGGuy, "The actual per pound fee/tax would be less than one cent (0.68 cents), which would only add about 1.5 cents per kWh to the cost of coal fired electricity and a trivial 8 cents per therm of gas. The $/ton is too small to have the kind of impact we need."
But, this is a very unclear document. Is carbon the only GHG-related pollutant to be taxed? What about methane? Remember that different Greenhouse Gases (GHGs) have different global warming implications. Methane, again, is roughly 23 times the impact of CO2 (although with a shorter lifespan in the atmosphere).
????????????? Questions abound.
A tax on gasoline:
$0.50 / gallon of gas, jet fuel, kerosene (petroleum based) etc?(added to current gas tax) (phased in over 5 years and then adjusted for inflation)
Very much like the first act of Energize America, which proposed a 1 cent/month increase in a gas tax, although EA2020 calls for it to be a 10-year process.
Note that this level of taxation would have only a relatively small direct impact on gasoline usage. This would leave US taxes almost an order of magnitude lower than, for example, most European economies.
Exemption for diesel: The fuel economy benefits of diesel surpass even its emissions benefits; it provides about a thirty percent increase in fuel economy and a twenty percent emissions reduction
Europeans favor diesel, to reduce fuel use and, therefore, CO2 emissions. But, the fuel efficiency should help pay for itself. Not quite sure that I can agree with this tax benefit.
Biofuels that do not contain petroleum are exempt. Biofuels blended with petroleum are only taxed on the petroleum portion of the fuel.
Well, biofuels (at this point) are far from carbon pure considering the energy required to make them. But, perhaps the 'absence of tax' could replace the direct tax subsidy that corn-based ethanol now receives.
**The .50 gas tax is in addition to what is derived from the per ton carbon tax in the previous bullet.
This would mean that the gas tax, in effect, would be roughly 60 cents as a gallon of gas has about 5.5 pounds of carbon
. Note, that Americans have faced a tripling of their price of gasoline since the late 1990s and, yet, the use of gasoline has increased.
Phase out the mortgage interest deduction on large homes. These homes have contributed to increased sprawl and longer commutes. Despite new homes in and of themselves being more energy efficient, the sheer size, sprawl and commutes lead to dramatically more energy use, or to put it more simply, a larger carbon footprint.
This is a bold statement and justification.
But, if we are basing things on carbon and pollution, how to differentiate between a highly efficient large home with solar water, solar electricity, wind electricity, gray water filtration, etc and a small home with no insulation, an inefficient heating system, etc?
If the objective relates to GHG, this is an uncertain move -- even if it might be right for other reasons.
Specifically, the proposal:
Phases out the mortgage interest on primary mortgages on houses over 3000 square feet.
Exemptions for historical homes (prior to 1900) and farm houses.
Exemptions for home owners who purchase carbon offsets to make home carbon neutral or own LEED certified homes.
An owner would receive 85% of the mortgage interest deduction for homes 3000-3199 square feet
70% for homes 3200-3399 square feet
55% for homes 3400-3599 square feet
40% for homes 3600-3799 square feet
25 % for homes 3800-3999 square feet
10% for homes 4000-4199 square feet
0 for homes 4200 square feet and up
See an example of how the changes in the mortgage interest deduction would work.
Again should a 2500 square foot home that is horribly energy inefficient be favored over the renewable power run 5000 foot home?
Why not an energy rating system, with some balancing for size/overall use if we are going to take this route.
This seems designed to anger people, add confusion to the tax code, and only peripherally address GHG issues.
Where will the revenue go?
This is a very good question.
Let's take a look.
First and foremost, the Earned Income Tax Credit will be expanded. This helps lower income families compensate for the increased taxes on fuels.
Expansion of the Earned Income Tax Credit
max earned income level from $5,590 to $7000
Phase-out from $7000 to $9000
Max earned income level from $8390 to $10,000
Phase-out from $15,390 to $17,000
Two or More:
Max earned income level from $11,790 to $15,000
Phase-out from $15,390 to $18,000
Okay, something that I can support, that makes sense to help those lower on the economic ladder deal with carbon fees.
The revenue from the gas tax goes into the high way trust fund, with 40 % going to the mass transit and 60 % going to roads. The revenue from the tax on jet fuel goes into the airport and airway trust fund.
Huh??? A big huh???
Why not far more of the gasoline tax to building a better rail network across the nation?
Why should the fees be spent, so much, to subsidize the very things that we want to move away from. Why not, at minimum, use jet fuel fees for fostering mass transit to airports, reducing airport CO2 footprints, and R&D for more efficient aviation? But, actually, more appropriately, for everything in the economy other than aviation.
Finally, the revenue from the fee on carbon emissions will go into the following accounts:
Medicare and Social Security
Universal Healthcare (upon passage)
State Children's Health Insurance Program
Renewable Energy Research and Development
Low Income Home Energy Assistance Program
This is a reasonable 'draft' list, sort of ...
Why, however, should we fund SCHIP through carbon fees, specifically? Why should this fund Medicare and Social Security? Why? Why not address all national financial requirements, e.g., pay for Iraq via a gas tax?
Why not take 50% of the fees and give them to all Americans, on an equal basis, as a check 1 December each year -- it is our common property that is being devastated after all.
And, the other 50% should be 100% focused on energy and global warming related items. Do things to lower energy costs for average Americans, American government (at all levels), American businesses.
This list is, again, a lot of 'feel good' items but it does not suggest a serious thinking through of the issue. For example, how much money would such a fee make available and how would it be split via these areas?
By the way, notice that Dingell gives no indication, in any way, as to the quite real economic benefits from things like reduced health impact from pollution, jobs for energy efficiency and renewable energy, savings in homes/businesses/government due to energy efficiency, etc ...
This truly does not seem to be a seriously worked out concept and proposal, it certainly is not fully fleshed out.
And, well, there is another quite serious question about this. Notice how this plays to RWSM noise/talking points about the "tax-and-spend Democrat Party".
* Create a tax
* Hit a major tax benefit
* Give money solely to 'librul' sounding programs
Hmmm ... is this is seeking to outrage rather than create support?
Is Dingell sincere?
Now, there are reasons to question John Dingell's sincerity on this. He is far from the greatest friend to the environment. In the environment and Democratic Party friendly
Wall Street Journal
earlier this year he was quoted negatively based on this CNN (thank you David Roberts)
SWAIN: Mr. Chairman, I want to go back to your statement that the American people want action [on climate change]. Does that also correlate with the American people being willing to pay higher prices, because of energy legislation?
DINGELL: I sincerely doubt that the American people are willing to pay what this is really going to cost them.
I will be introducing in the next little bit a carbon tax bill, just to sort of see how people really feel about this. And it will impose, for example, on gasoline a 50 cent tax. It also will place a very substantial tax on CO2 emissions, amounting to a double-digit tax on tons of CO2 emitted.
And I think, when you see the criticism I get, you'll understand that you will be getting the answer to your question.
Hmmm ... does this look to be a plan to do something to undermine momentum for action?
We could look to the NYTimes from 5 Sept: What Is John Dingell Really Up To?
Since [the CNN interview], though, he has explained away the interview by saying that it’s the job of political leaders like him to persuade Americans to change their minds. He has also been offering eloquent, full-throated defenses of the tax. And here’s the thing: he has a really good argument.
From that quite interesting article, trying to figure out Dingell's motivations, the ending
I asked him whether Mr. Gore, who has been both a Dingell nemesis and ally at various times, had been right for all those years he was pointing out what was happening to the earth’s climate.
“I think a cold statement on that point would be yes,” Mr. Dingell replied.
And would it have been easier to solve the problem if we had started earlier?
“What’s the saying? The saddest words in the English language — ‘might have been.’ ”
Is Dingell is serious here? Are the problems with this initial concept simply problems for something that will be strengthened? Or, is this a poison pill?
I don't know.
But, my comments to the site will treat this seriously, suggesting ways to make this better.
And, providing arguments to support the requirement.
has published a glowing, high quality analysis of the proposal by Charles Komanoff, Carbon Tax Center: Dingell opens the door
. Do make sure to consider/read that before going to comment on the proposal at Dingell's site.