In July, the Seattle Times explained the controversy:
"This summer, as Washington bakes in a West Coast drought, a flock of petition-toting activists has fanned out to parks, festivals and street corners, trying to force the sort of sweeping action on global warming that has eluded state lawmakers.
"They’re wrangling signatures for Initiative 732, which would put a new tax on carbon burned in gasoline, natural gas and other fossil fuels — while cutting other taxes by an equal amount. By raising the price of dirty energy, I-732 aims to cut greenhouse-gas emissions and encourage development of cleaner alternatives...
"[However,] leaders of the Alliance for Jobs and Clean Energy have sought to discredit I-732 in recent weeks. They’ve circulated poll results that suggest it would be rejected by voters. And they’ve argued the initiative is insensitive to communities of color.
"Alliance members say they’re working on their own climate-initiative proposal for 2016, one that would divvy up tax dollars differently, include input from a more diverse crowd, and, most important, have a better chance to pass."
The Times further noted:
"As a 'revenue-neutral' plan, I-732 would not fill state government coffers with cash. While the carbon tax would raise an estimated $1.7 billion a year — and cost the average family an estimated $300 a year in higher gas and energy prices — it would give away an equivalent amount back to consumers, mostly through a full percentage point cut in the state sales tax.
"That differs from cap-and-trade legislation offered up by [Washington Gov. Jay] Inslee and backed by the alliance in this year’s legislative session. That plan would have raised more than $1 billion a year from fees on carbon and directed the proceeds to the state education budget, transportation projects, affordable housing and other programs.
"While the alliance’s 2016 initiative has not been revealed, it’s clear that backers don’t agree with I-732’s revenue-neutral approach."
The controversy was mentioned in a September 4 piece for NYTimes.com by Gregory Mankiw, a former economic advisor to President George W. Bush and a right-of-center advocate of federal revenue-neutral carbon tax legislation. Mankiw took a rather dismissive approach to I-732's opponents, observing:
"Most of the revenue from [I-732] would be used to reduce the state sales tax by one percentage point. A smaller amount would be used to reduce taxes on manufacturing companies and to fund a tax rebate of up to $1,500 for low-income working families. The overall plan is progressive and revenue-neutral. If passed, the initiative would yield a tax shift, not a tax increase.
"That is why some environmentalists are opposed. Rather than rebating the money the carbon tax would raise, they want to spend it on environmental and other government programs.
"To be sure, a person can favor both a more environmentally friendly tax policy and greater government spending. But there is no good reason to marry these policies. If the goal is to build a political consensus to tackle climate change, there is good reason not to.
"The size of government is an issue that divides the political right and the political left, and it will most likely always do so. The same need not be true of climate change."
A de facto rebuttal to Mankiw's piece was written on September 8 by Robert Cruickshank of the Northwest Progressive Institute. Cruickshank observed:
"One of the supposed selling points for I-732 is that it is revenue-neutral, meaning that it won’t bring in any money for the State of Washington.
"Supposedly, this approach will be appealing to conservatives, because the new tax won’t result in any additional funding for public services.
"Why any progressive or environmentalist would think this is somehow a good thing is beyond me. Our state badly needs more revenue to fund the essentials of a 21st century society. We need more money for schools, human services, and for sustainable infrastructure. Revenue neutrality is one of the last things this state needs. Why on earth would we pass up an opportunity to invest in our future?"
Cruickshank further noted:
"The basic concept behind I-732 is that if you raise the costs of polluting high enough, the market will somehow magically decide to start building alternatives to infrastructure that relies on burning carbon. The problem with this approach should be obvious: what happens to people in the meantime? What if the market takes its sweet time to build the green infrastructure we need? As much as we want to see a price on pollution, that price should also be economically just.
"I-732’s details also suggest that low-income Washingtonians and people of color will be left out of the process and excluded from most of the benefits. That’s the argument that Tony Lee and Carolina Gutierrez made earlier this summer in calling for a more equitable policy than I-732:
As a 'revenue neutral' proposal, Initiative 732 (which is collecting signatures) aims to disturb the status quo as little as possible. It redirects most of the revenue generated by its carbon tax as rebates to rich and poor alike, without investing in pollution reduction nor community benefit…
True climate justice looks like transit serving affordable housing, clean energy in low-income neighborhoods, healthy food systems and good locally rooted jobs. It takes an equitable policy, and at a time of great need, that means investments targeted for communities of color and people of lower incomes.
Climate advocates and movements fighting for justice are aligned, but our proven solutions are being held hostage to the fossil fuel industry. Achieving equitable policy requires mobilizing those most impacted by climate change.
"Tony and Carolina are absolutely right. Progressives should listen to these voices, rather than chase conservative voters who aren’t likely to vote for I-732 anyway.
"Despite the many problems of revenue neutrality, backers of I-732 claim that their carbon tax has to be revenue neutral to earn support from conservative voters.
"This is a badly misguided view of how right-wing voters think and act. Conservatives aren’t just opposed to spending money to provide essential public services. They’re also opposed to raising additional revenue, period. They vehemently oppose any new tax, or any increase of an existing tax, for any reason. They won’t care that I-732 lowers other taxes, because they believe those other taxes should be cut anyway, and not as part of some political deal benefiting liberals."
"A cap-and-trade system, like the one proposed by Governor Jay Inslee or the one in operation in California, is a far better solution. California’s cap-and-trade system has been in operation for nearly five years. In that time it’s raised billions of dollars that is helping the state provide green infrastructure that will help people, especially those with low incomes, afford to live a sustainable lifestyle...
"Here’s just some of the things that California’s cap-and-trade system has funded:
- High speed rail
- Clean vehicle rebates
- New trains and stations for local rail lines
- Weatherization for low-income homes
- Rooftop solar power for low-income homes
- Electric buses
- Affordable housing
"It also has more public support. 61% of California voters rejected the effort to repeal the state’s cap-and-trade initiative. That came at the 2010 election, which was not nearly as favorable for progressive causes as a presidential year will be.
"Cap-and-trade is vehemently opposed by the oil industry, which tried in vain to get fuels exempted from the system in California. They claimed that applying cap-and-trade to fuels would cause gas prices to soar.
"They were wrong — gas prices were barely impacted.
"The oil industry’s main concern is that cap-and-trade creates new revenue that states can use to build infrastructure that allows people to buy less oil. A carbon tax does no such thing. Because it doesn’t pay for new infrastructure, the oil industry sees it as less of a threat to their customer base."
Advocates of revenue-neutral carbon tax legislation have long argued that revenue-neutrality will bring conservatives to the table. However, carbon-tax advocates obviously can't chase progressives from that table, as Mankiw did in his NYTimes.com piece.
This is a tough question for carbon-tax advocates to confront. What if revenue-neutrality is in fact a non-starter with progressives whose support for carbon-tax legislation is indispensable to its passage? If Cruickshank is right--if there is simply no scenario under which conservatives will support carbon pricing--then is the best course of action a full embrace of cap-and-trade (ironically enough, also a policy that once had appeal to conservatives) or a non-revenue-neutral carbon-tax policy, and a renewed commitment to win the fierce ideological and political battle required to implement such a policy? The answer will define this generation--and future generations as well.