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Will Washington state have the nation’s first carbon tax?

Will Washington state have the nation’s first carbon tax?

Yoram Bauman is the world’s only “stand-up economist.” He makes his living poking fun at economics and economists. But he’s dead serious about fighting climate change, and he’s the intellectual force behind a climate-related initiative that seems likely to appear on Washington state’s November 2016 ballot.

If voters approve the measure, dubbed Initiative 732, it would implement the first carbon tax in the nation. The purpose would be to motivate households and businesses to cut down on the burning of fossil fuels, the major source of man-made emissions of carbon dioxide, the main greenhouse gas. By raising the price of fossil fuels it would encourage conservation and efficiency and the substitution of low-carbon and carbon-free sources of energy by making these energy sources more cost-competitive.

The organization pushing the initiative is Carbon Washington. The principle behind the proposal is simple: Raise taxes on what you want less of and lower taxes on what you want more of.

In this case, the proposal taxes carbon emissions at a rate of $25 per metric ton. The tax would be phased in over two years and increase each year after that by 3.5 percent plus the rate of inflation. The proposal lowers the sales tax by one full percentage point (from 6.5 percent to 5.5 percent) and provides a rebate to poor families of up to $1,500 to lessen the burden of the carbon tax on their limited incomes. Finally, it virtually wipes out the so-called business and occupation tax on manufacturers in the state. For manufacturers–which tend to be more energy-intensive than other types of businesses–that tax falls from 0.44 percent of gross business receipts to 0.001 percent.

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