Why say NO to I‑732? It’s about justice — environmental and social justice

Edi­tor’s Note: The team at NPI is pleased to wel­come Robin Barnes to the Cas­ca­dia Advo­cate. Robin holds a Ph.D. in Physics from Rut­gers, The State Uni­ver­si­ty of New Jer­sey. She cur­rent­ly works on inter­na­tion­al non-prof­it projects that pro­mote gen­der equi­ty, human devel­op­ment, and envi­ron­men­tal jus­tice. In this spe­cial guest post, she explains why vot­ers should reject Car­bon­WA’s I‑732.

The warm­ing effects of Earth­’s atmos­phere were first dis­cov­ered in the year 1820 by Joseph Fouri­er. It was well under­stood and quan­ti­fied by Svante Arrhe­nious at the turn of the twen­ti­eth cen­tu­ry. It is sci­en­tif­i­cal­ly well estab­lished that our plan­et has a fever, and there is no dis­pute about its cause. Our world’s cli­mate has been dam­aged by burn­ing fos­sil fuels on a mas­sive scale, which has sig­nif­i­cant­ly increased the amount of pol­lu­tion in our atmos­phere. To address this envi­ron­men­tal cri­sis, we need to change our behav­ior — and we know this.

While the sci­ence is indis­putable, human­i­ty can’t seem to agree on solu­tions to pro­tect our­selves and the Earth, the only inhab­it­able plan­et we’ve got.

Pro­po­nents of Ini­tia­tive 732, which will appear on Wash­ing­ton State’s Novem­ber bal­lot, say Wash­ing­ton’s response to the cri­sis should be to start levy­ing a car­bon tax on emis­sions of air pol­lu­tants like car­bon diox­ide and methane — and use the rev­enue from that tax to low­er oth­er regres­sive taxes.

But this approach is fatal­ly flawed. Here’s why.

Let’s begin by estab­lish­ing the fol­low­ing root prin­ci­ple: A car­bon tax, by itself, does not curb con­sump­tion of fos­sil fuels, the main dri­ver of air pol­lu­tion. Peo­ple chang­ing their behav­ior to avoid pay­ing the tax is what low­ers emis­sions. A car­bon tax can reduce emis­sions if and only if it will tax peo­ple who are able to mit­i­gate their con­sump­tion of fos­sil fuels, there­by avoid­ing the tax.

If the pur­pose of a car­bon tax is to low­er emis­sions, impos­ing it on peo­ple or enti­ties who lack the means to aggres­sive­ly reduce their emis­sions is sim­ply inef­fec­tive. Impos­ing this tax on peo­ple who are not in an eco­nom­ic posi­tion to low­er their car­bon con­sump­tion is mis­di­rect­ed and unjust.

Corol­lary: If a car­bon tax actu­al­ly low­ers emis­sions, it will low­er its own rev­enue gen­er­at­ing pow­er as well. A car­bon tax that effec­tive­ly low­ers emis­sions will min­i­mize or elim­i­nate itself by design – if emis­sions fall, so does rev­enue. As peo­ple avoid pay­ing the tax, the rev­enue from the car­bon tax dimin­ish­es. That is, unless the tax is set to be rev­enue neu­tral. If it suc­ceeds in low­er­ing car­bon emis­sions, we will have to con­tin­u­ous­ly raise the car­bon tax rate to make up for rev­enue loss.

What does I‑732 do?

• It sig­nif­i­cant­ly low­ers the Busi­ness and Occu­pa­tion (B&O) Tax, and replaces it with a car­bon tax of $25 per ton min­i­mum, increas­ing up to $100 per ton max in four years to main­tain rev­enue neutrality;
• It low­ers the retail sales tax by 1%;
• It funds the Work­ing Fam­i­lies Rebate (an attempt to cre­ate a state-lev­el earned income tax cred­it) so qual­i­fy­ing fam­i­lies see their oblig­a­tions reduced. This is $1500 per fam­i­ly annu­al­ly for up to 400,000 families.

Pro­po­nents of I‑732 are mar­ket­ing the ini­tia­tive as a high­ly pro­gres­sive change to our tax code, pri­mar­i­ly because it funds the Work­ing Fam­i­lies Tax Rebate and gives earned income cred­it to qual­i­fy­ing low income fam­i­lies. This is a nice fea­ture, but what does this tax swap do to fam­i­lies that can­not qual­i­fy for earned income credit?

I‑732 redis­trib­utes B&O tax oblig­a­tions to all Wash­ing­ton State res­i­dents by impos­ing a car­bon tax. Shift­ing tax oblig­a­tions from busi­ness­es and trans­fer­ring them to low and mid­dle income fam­i­lies is not a pro­gres­sive tax maneu­ver. It is true that busi­ness­es will pay a car­bon tax, as well, but that is also a regres­sive choice.

Busi­ness­es and cit­i­zens who have the means to aggres­sive­ly able to low­er their car­bon emis­sions are the ones who will pay the least tax.

Who are those peo­ple? They are the wealthy who can afford to solar­ize, replace their win­dows, insu­late their walls, and buy effi­cient appli­ances and elec­tric cars. Those who can­not choose to make these changes are trapped pay­ing an ever-increas­ing tax. And they con­tin­ue to pay that tax, even though they can­not con­tribute to low­er­ing emis­sions in a sig­nif­i­cant way.

There is noth­ing in I‑732 that helps low and mid­dle income fam­i­lies improve their ener­gy effi­cien­cy or decrease their depen­dence on fos­sil fuels.

What’s more, Wash­ing­ton State’s “big pol­luters” are most­ly ener­gy sec­tor com­pa­nies. What does it mean to impose a car­bon tax on a com­pa­ny that runs on, or sells, fos­sil fuels? We know that some­times, big cor­po­ra­tions make emp­ty threats about pass­ing costs onto their cus­tomers. But I‑732’s own pro­po­nents have acknowl­edged that Wash­ing­ton fam­i­lies will be direct­ly impact­ed.

What does I‑732 look like from a 20,000 foot view? Well, after two years of phas­ing in, it starts at $25 per ton and can grow to $100 per ton. As acknowl­edged by pro­po­nents, this is 25 cents per gal­lon at the pump that can grow to $1 per gal­lon, plus the rel­e­vant tax­es on util­i­ties. Details about the tax rate vary from house­hold to house­hold, depend­ing on the fuel mix that it uses.

Car­bon­WA claims that at around 25 cents per ton, elec­tric­i­ty will be taxed around 1 cent per kwh, and nat­ur­al gas at around 13 cents per therm.

That is a mod­est 8% to 10% increase at my house. When the rate increas­es by a fac­tor of four, though, it’s blis­ter­ing. And because it is tied to non-dis­cre­tionary pub­lic sec­tor bud­gets, it will nev­er go away.

Car­bon­WA claims that a 1% sales tax decrease will off­set this tax for most fam­i­lies. That might be true for wealthy house­holds that have a lot of dis­cre­tionary income. Low and mid­dle income house­holds spend much more mon­ey on food, trans­porta­tion, hous­ing, and util­i­ties as a per­cent­age of their bud­get – all expens­es that are not sub­ject to sales tax. The cor­re­spond­ing decrease in the sales tax would­n’t amount to much more than a hun­dred bucks a year.

A fam­i­ly of four in Wood­inville that makes $50,000 to $60,000 per year can deduct $813 in state sales tax on their fed­er­al income tax return. The 1% state sales tax reduc­tion for this tax­pay­er amounts to about $125 annu­al­ly. Car­bon­WA tells us that this off­sets this family’s car­bon tax expenditures.

Sup­pose that this is true for the aver­age house­hold at the intro­duc­to­ry rate. If the ini­tia­tive expects to low­er emis­sions of CO2, methane, and oth­er air pol­lu­tants at all, that rate will have to increase sharply. At a rate of $100 per ton, that off­set is not even close. And con­sid­er that I‑732 pays up to $1,500 per year into the Work­ing Fam­i­lies Tax Rebate to off­set the car­bon tax for one low income household.

This rais­es the ques­tion: is I‑732 actu­al­ly about low­er­ing emis­sions? Can we expect car­bon emis­sions to drop and pain­less­ly main­tain rev­enue neu­tral­i­ty over time? Who is it pain­less for? Or is the goal of the ini­tia­tive to replace a statewide pro­duc­tion tax with a con­sump­tion tax?

Pro­po­nents of I‑732 like to point to British Columbi­a’s expe­ri­ence, cit­ing our north­ern neigh­bor as a role mod­el. But as Jens Wiet­ing of the Sier­ra Club of B.C. point­ed out in a post for The Huff­in­g­ton Post last year, the province is no cli­mate action leader. It has a car­bon tax, but its emis­sions are going up, not down!

If you live in British Colum­bia you might think that our province is a cli­mate cham­pi­on, because you heard it from our government.

Last month, for exam­ple, the provin­cial gov­ern­ment sent out a bold press release tout­ing B.C. as a world leader in cli­mate action. The release high­light­ed B.C.’s car­bon tax and the accom­plish­ment of “meet­ing our 2012 GHG reduc­tion target.”

How­ev­er, just a few days lat­er, the Cana­di­an gov­ern­ment released its lat­est green­house gas emis­sions data show­ing that B.C.’s emis­sions actu­al­ly increased by 2.4 per cent in 2013 (to 63 mil­lion tons of green­house gas­es, from 61.5 in 2012. This is a big deal, because the threat of glob­al warm­ing has reached a point at which we can­not afford our annu­al emis­sions to con­tin­ue to increase.

What about envi­ron­men­tal and social jus­tice? Many peo­ple get by on fixed or lim­it­ed incomes. They are not in a posi­tion to low­er their emis­sions much.

Geo­graph­i­cal­ly speak­ing, Cen­tral and East­ern Wash­ing­to­ni­ans could be more affect­ed by I‑732 than their fel­low cit­i­zens on the west­ern side of the Cas­cades because their cli­mate fea­tures more extreme tem­per­a­tures (cold­er win­ters mean high­er heat­ing bills, hot­ter sum­mers neces­si­tate air con­di­tion­ing for com­fort) and their trans­porta­tion expens­es can be high­er due to liv­ing fur­ther away from places of busi­ness like the gro­cery store or doc­tor’s office.

If the rev­enue from I‑732 were going to invest­ments that would speed our tran­si­tion to a clean ener­gy econ­o­my, that’d be one thing.

But that’s not the case. Pro­po­nents of I‑732 delib­er­ate­ly cre­at­ed a pro­pos­al that would­n’t result in any fund­ing for envi­ron­men­tal­ly friend­ly infra­struc­ture, whether that be light rail, weath­er­ized schools, or any­thing else.

Walk through a neigh­bor­hood in any city, and start mak­ing a men­tal inven­to­ry of the infra­struc­ture changes that need to take place in order to sub­stan­tial­ly reduce the air pol­lu­tion that is dam­ag­ing our cli­mate. It is daunt­ing – espe­cial­ly in neigh­bor­hoods where low and mid­dle income peo­ple live. Upgrad­ing the infra­struc­ture is often cost prohibitive.

What would an envi­ron­men­tal­ly just pol­lu­tion tax look like? Ide­al­ly, it would be tied to projects that low­er pol­lu­tion. It would tax only peo­ple and enti­ties that have the means to low­er their emis­sions in a mean­ing­ful way. It would be able to man­age a reduc­tion in rev­enue (as car­bon diox­ide and methane emis­sions fell) with­out hav­ing to raise rates to main­tain rev­enue neutrality.

We do need to put a price on pol­lu­tion. But the rev­enue we raise should go to pri­or­i­ties like solar­iz­ing neigh­bor­hoods, mak­ing renew­able ener­gy more acces­si­ble to low and mid­dle income fam­i­lies, pro­vid­ing zero emis­sions infra­struc­ture to city gov­ern­ments, and so forth. If we insti­tute a pol­lu­tion tax, then we have to make sure the peo­ple pay­ing the tax can reduce their depen­dence on fos­sil fuels, or that the projects we embark upon enable them to do so.

I‑732 does none of these things. It pro­pos­es to change the tax code in a vast­ly com­pli­cat­ed way – and one that ben­e­fits wealth­i­er peo­ple and wealth­i­er busi­ness­es over time. It tax­es peo­ple who are not in a posi­tion to change their emis­sions, and that will do noth­ing to address our pol­lu­tion problem.

To recap:

• I‑732 is a regres­sive tax shift from busi­ness­es to fam­i­lies and indi­vid­u­als. Wealth­i­er fam­i­lies will be in a posi­tion to avoid the tax, while mid­dle and low income fam­i­lies will not. They’ll be trapped, because I‑732 does­n’t put the rev­enue it rais­es to work for the pub­lic goods need­ed to allow us to low­er our emis­sions on a mas­sive scale, nor will its off­sets be enough to allow most Wash­ing­to­ni­ans to light­en their envi­ron­men­tal foot­print on their own.
• There is no rea­son to believe that I‑732 will reduce emis­sions sig­nif­i­cant­ly over time. Because its lever­age is exert­ed on peo­ple who do not have the means to change their behav­ior, there is a hard lim­it to its effect.

We can put a price on pol­lu­tion in a way that is both fair and effec­tive at low­er­ing emis­sions. To do that, though, we must first vote NO on I‑732 this November.