Inslee’s carbon-tax plan is about revenue — not climate change

Most Washington state residents and lawmakers are no doubt concerned about the threat that climate change poses for our planet, yet Gov. Jay Inslee struggles to gain support for a budget plan that would impose a carbon tax to battle carbon pollution.

It’s not hard to figure out the reason for the resistance, as the tax proposal is less about protecting the environment and more about gaining revenue to fund a grab bag of new and existing ­programs. But it’s also not hard to figure out a simple solution. If the governor is serious about protecting the environment, he simply needs to rework his tax proposal to make it “revenue neutral.”

Taxing carbon emissions is a reasonable idea. It shouldn’t be “free” to emit these pollutants any more than it should be free to impose any other costly side effects of industrial and commercial activity on society at large. And, placing a price on emissions via a carbon tax will cause companies to emit fewer of them. That’s the sole and simple purpose of such taxes.

{mosads}However, to make it revenue neutral the money raised by the new carbon tax should be used to lower an equal amount of other taxes that Washington businesses and consumers already pay. This guarantees that no one will be financially worse off because of a tax on emissions.

Higher taxes reduce prosperity and make it harder for businesses to invest in cleaner technologies. They also make it harder for individuals to, say, afford a newer car that pollutes less than their old one. And turning climate change policy into a tax grab makes it less likely that we can gain the broad public consensus that’s needed to support policies that might really help the climate.

Inslee wants to levy a $20-a-ton price on such emissions that will increase over time. Fine, so far. But, as the Seattle Times reported last week, “The billions of dollars raised would support clean-energy projects, work to improve floodwater management and reduce risks of wildfires, and [provide] assistance to offset the tax’s impact on low-income communities.”

Furthermore, the newspaper reported, nearly $950 million of the estimated $3.3 billion of new revenue over four years would replenish budget reserves that were used to increase K-12 education spending following a state Supreme Court decision. Some of these dollars are tangentially related to climate change, but the tax mainly would fund more government spending. In fact, Inslee and some of the tax’s supporters don’t even attempt to hide that the increase isn’t solely about battling climate change.

After all, according to news reports, the governor himself has said that it “is about building jobs in rural areas” and termed it “an investment strategy as much as it is a revenue strategy.” Further, the Puget Sound Regional Council backs the tax on fuel as a way to fix the state’s backlog of road and freeway spending. Those are important goals. But debates about the proper amount of state spending shouldn’t get tangled up in efforts to combat climate change.

This carbon-tax proposal would harm not only businesses, but consumers who will face higher natural-gas prices (10 percent), gasoline prices (six to nine percent) and electricity costs (four to five percent), according to policy advisers mentioned in the Times report. Legislators know that if they approve the Inslee tax plan, prices on virtually everything will go up. As a broader strategy, it’s counterproductive to train voters to believe that an effective climate-change policy is always going to hit them hard in the pocketbook. That’s one reason a previous carbon-tax ballot initiative failed by 20 points — and why a new effort is likely to face the same fate.

The battle against climate change is supposed to be so important that it transcends petty politics. “It is our state’s destiny — because of who we are — to defeat climate change,” the governor said in his 2018 State of the State address. 

If Inslee believes that to be true, he simply needs to craft a carbon-tax plan that rebates all of the revenues from the new tax to the businesses and individuals who will pay it. Otherwise, we can discount his climate-change rhetoric as just a cynical ploy to get more cash.

Steven Greenhut is Western region director for the R Street Institute, a free-market think tank. He is based in Sacramento, Calif.