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Pay for carbon pollution? Why some environmentalists don’t support this state tax

October 20, 2016 at 6:20 PM EDT
In Washington state, economist Yoram Bauman is leading a campaign to cut carbon emissions by imposing a revenue-neutral carbon tax. Everyone would have to pay, but instead of creating more revenue, existing taxes like the state sales tax would be cut. Economics correspondent Paul Solman reports that the opponents and proponents of the measure are not who you might expect.
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JUDY WOODRUFF: One subject that’s gotten less attention in the national election is climate change, but there is a battle over a carbon tax ballot initiative in Washington state next month. It would be the first tax of its kind in the country.

Economics correspondent Paul Solman has the story for his weekly series, Making Sense.

YORAM BAUMAN, Carbon Washington: You might be an economist if you don’t read human interest stories because they don’t interest you.

(LAUGHTER)

PAUL SOLMAN: At Seattle’s Museum of Flight earlier this year, Climate Night, headlining, Yoram Bauman, who claims, with a straight face, that he’s the world’s first and only economic comic.

YORAM BAUMAN: You might be an economist if you have ever gone into a bank or other financial institution in the hopes of getting a date.

(LAUGHTER)

YORAM BAUMAN: If you adamantly refuse to sell your children because you think they will be worth more later.

(LAUGHTER)

PAUL SOLMAN: But when we visited Seattle in April, Bauman had begun a dead serious fight, to combat climate change in his home state of Washington by imposing a tax on carbon emissions. He’d founded the grassroots group Carbon Washington to put the issue to voters.

MAN: Initiative 732, it’s going to be on the November ballot.

MAN: I-732 works by charging polluters with a carbon fee, which lowers pollution.

WOMAN: And then the revenue that is created will go to reducing other taxes in the state.

PAUL SOLMAN: Making the carbon tax, starting at $25 per ton of CO2, about 25 cents per gallon of gasoline, revenue-neutral.

YORAM BAUMAN: The revenue from the carbon tax goes to cut existing taxes. Most of it goes to cut the state sales tax by a full percentage point.

Most households are going to pay a few hundred dollars a year more for fossil fuels and a few hundred dollars a year less for everything else.

PAUL SOLMAN: Everyone will pay the carbon tax, says Bauman. Everyone gets the sales tax cut. But two groups get a bonus, the first, working families, who’d be hardest hit by a rise in energy prices.

YORAM BAUMAN: It’s going to provide up to $1,500 a year for 400,000 working families in Washington state.

PAUL SOLMAN: Families like Jason Puracal’s.

JASON PURACAL, Carbon Washington: Yes, I will pay a little bit more in fossil fuel use. However, the sales tax drop of 1 percent will offset that. And so I shouldn’t see a change in my spending overall.

PAUL SOLMAN: In addition, businesses whose higher energy costs would make them uncompetitive with rivals elsewhere will have the state business tax eliminated.

Still not enough for Ian Tolleson, though, who lobbies for food processors in the Pacific Northwest.

IAN TOLLESON, Northwest Food Processors Association: We heat things, we cut things, we wash, and this is all for food safety. And that requires a lot of energy, tax, tax, tax all through the supply chain. And what that does, our products are now more expensive on the shelf. And how can we compete with those producers that wouldn’t have this tax?

PAUL SOLMAN: We met up with Tolleson at Seattle’s Pike Place Market, which featured, among other attractions, the world’s presumably first and only Hula-Hoop guitar-on-chin-balancing busker.

Moreover, says Tolleson:

IAN TOLLESON: This is a global phenomenon, and it needs a global solution. Is it fair to put it on the back of Washington employers and families?

PAUL SOLMAN: But what really struck us back in the spring, when we started covering this story, was opposition to I-732 from people who identify as environmentalists, like union president Jeff Johnson.

JEFF JOHNSON: During the winter, we have been struck with repeated floods and mudslides. In the summer, we have droughts and forest fires. Our shellfish industry has left the state and gone to Hawaii because the acid levels in the ocean has risen so much.

PAUL SOLMAN: But doesn’t that mean that you should embrace anything that would help climate change and counteract it?

JEFF JOHNSON: No. No, it doesn’t. We have got an energy-intensive company, Kaiser Aluminum, out in Spokane, eastern side of our state. It’s the most efficient aluminum rolling mill in the world, right? With just a carbon price, they become less competitive with aluminum makers in other parts of the states, in other parts of the world.

PAUL SOLMAN: OK, maybe a union leader, however green, has to worry, first and forever, about jobs, even if it means an unusual alliance with business.

But then we met Jill Mangaliman.

What does that shirt say?

JILL MANGALIMAN, Executive Director, Got Green: Oh, yes, so this is where — we’re Got Green. We are a community-based organization in South Seattle led by people of color.

PAUL SOLMAN: But why would a militant environmental group oppose a carbon tax?

JILL MANGALIMAN: Without any kind of targeted revenue, business can continue as usual, and that’s not what we want.

PAUL SOLMAN: More targeted revenue than the $1,500-a-year subsidy to her constituents and for local groups like Got Green.

Meanwhile, it was also surprising to find out who was popping up in support, right-wing policy lobbyist Todd Myers, for instance.

TODD MYERS: Anything that moves environmental policy away from regulation, which tends to be very expensive and ineffective, toward a personal incentive, which is more effective, is a good thing.

PAUL SOLMAN: A good thing, agrees Jason Puracal, who happens to be an ardent environmentalist.

JASON PURACAL, I-732 Supporter: It’s great to put a price on carbon and try to move us away from fossil fuels, but how do we do so in a way that’s equitable for all?

PAUL SOLMAN: And that question may be why, in the six months since our report aired, polls have remained evenly split, the pro and con bedfellows as odd as ever.

Indeed, the only major environmental group to back the initiative is the Audubon Society. Among those who do not, the national Sierra Club, based in California, which overruled local Washington state members to declare that the Sierra Club doesn’t support I-732.

Aren’t you at all concerned that, if this initiative fails, in part because you folks don’t support it, it will set back the climate change movement?

MICHAEL BRUNE, Executive Director, Sierra Club: No, not at all. We believe that there’s a better way that helps us get off fossil fuels, but accelerates a transition to clean energy.

PAUL SOLMAN: That better way, says executive director Mike Brune, would involve raising more money than a revenue-neutral tax, and funneling it to clean energy projects and to those who’d suffer from higher energy prices.

MICHAEL BRUNE: What we are looking for is a set of policies that will simultaneously put a price on carbon, so that the economy shifts towards good family-sustaining jobs in the clean energy sector, and is directing funds towards low-income communities, communities of color, the communities that have the highest level of pollution in the state.

PAUL SOLMAN: As for the lack of new investment money for clean energy, well, that’s just why Greg Mankiw, former head of George W. Bush’s Council of Economic Advisers, finds a revenue-neutral carbon tax so appealing.

GREGORY MANKIW, Economist: The first principle of economics is that people respond to incentives. And what a carbon tax tries to do is tries to harness that principle to get people to reduce their carbon footprint.

PAUL SOLMAN: But there is a case to be made, isn’t there, that we ought to invest in clean energy, and here’s a revenue source we can use to make those investments?

GREGORY MANKIW: If you give people the right incentives, then the private sector will be smart enough to make the right investments.

MICHAEL BRUNE: Putting a price on carbon can be great policy. But that’s not all that’s needed. We need to find a way to address the constituencies in a particular state.

PAUL SOLMAN: How do you respond to the criticism that you’re essentially catering to certain constituencies here, rather than independently analyzing?

MICHAEL BRUNE: That seems a little silly. I think it’s fair to say that two of the biggest challenges we face in this country are climate change and economic inequality. If we pit one of those challenges against the other, neither will be successful.

PAUL SOLMAN: But will anything be successful, asks Greg Mankiw, if we try to address both of those and more in one package?

GREGORY MANKIW: People on the left say they want to combine a carbon tax with all their pro-spending agenda. Someone on the far right could say, gee, I love a carbon tax, as long as we use it to reduce the estate tax.

So, what I-732 tries to do is, it tries to frame the issue relatively narrowly, so we can all come together and reach a consensus on this, rather than bundling it together with a lot of extraneous issues, perhaps important issues, but are extraneous to the issue of putting a price on carbon.

PAUL SOLMAN: Last word goes to Yoram Bauman, the world’s foremost stand-up economist, and, given his long environmental track record, perhaps its greenest.

YORAM BAUMAN: One of the things that I love about this policy is that it does have potential for bipartisan support. It’s not big government. It’s not smaller government. It’s just, how do we make the tax system fairer and more sustainable? That’s a powerful message that hopefully we can take around the country.

PAUL SOLMAN: How the voters of Washington state respond to the message will be known on November 8.

This is “NewsHour” economics correspondent Paul Solman.

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