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Congressman Unveils Carbon Tax Proposal; Asks for Public Review and Comment

US Congressman John D. Dingell (D-MI), Chairman of the House Committee on Energy and Commerce, has developed a legislative proposal that would create a carbon tax. Before introducing a formal bill, the Congressman is inviting constituents and other interested parties to review his current proposal and provide feedback.

The legislation would impose a $50/ton tax on carbon emissions and an incremental $0.50/gallon tax on petroelum-based liquid fuels (diesel is exempt); and phase out the mortgage interest deduction on large houses. A summary of the draft legislation has been posted on Dingell’s Congressional website along with a form that allows reviewers to offer opinions and suggestions regarding the carbon tax proposal.

In order to reduce greenhouse gases and make the planet safe and healthy for future generations it will take a significant investment from all of us. A fee on carbon emissions requires a tithe from all citizens and industries, but no one entity will be unfairly leveled with a devastating burden. More importantly, it provides an incentive for change in our economy and our way of life. I welcome public input on how this policy proposal can best balance our environmental and economic concerns and I look forward to receiving feedback.

—John Dingell

Major provisions of the carbon tax proposal include:

  • A tax on carbon emissions of $50/ton, phased in over five years and adjusted for inflation. This would apply to carbon produced from the combustion of coal, including lignite and peat; petroleum and any petroleum product; and natural gas.

  • A tax on gasoline, jet fuel and kerosene of $0.50/gallon to be added to the existing gas tax, phased in over 5 years and then adjusted for inflation. Diesel fuel is exempt from the tax, as are 100% biofuels. The fuel economy benefits of diesel surpass even its emissions benefits, according to Dingell, hence the exemption to encourage its use. Biofuels blended with petroleum are only taxed on the petroleum component.

  • The $0.50/gallon fuel tax is incremental to the $50/ton carbon emissions tax.

The proposed legislation also phases out the mortgage interest deduction on large homes of more than 3,000 square feet, based on a sliding scale. There are exemptions proposed for historical homes (prior to 1900) and farm houses; and for home owners who purchase carbon offsets to make home carbon neutral or own LEED certified homes.

These homes have contributed to increased sprawl and longer commutes.  Despite new homes in and of themselves being more energy efficient, the sheer size, sprawl and commutes lead to dramatically more energy use—or to put it more simply, a larger carbon footprint.

—John Dingell

Revenue generated by the legislation will flow to an expansion of the Earned Income Tax Credit. This, according to Dingell, helps lower income families compensate for the increased taxes on fuels. The revenue from the gas tax will go into the highway trust fund, with 40% going to the mass transit and 60% going to roads. The revenue from the tax on jet fuel goes into the airport and airway trust fund.

The revenue from the fee on carbon emissions will go into a variety of accounts, including:

  • Medicare and Social Security
  • Universal Healthcare (upon passage)
  • State Children’s Health Insurance Program
  • Conservation
  • Renewable Energy Research and Development
  • Low Income Home Energy Assistance Program

Dingell is a co-sponsor the Hill-Terry fuel economy bill, which maintains separate standards for cars and light trucks, and establishes a minimum of 32 mpg and a maximum of 35 mpg combined standard for 2022. The auto industry is backing the Hill-Terry proposal against the more stringent Senate bill calling for a single 35 mpg standard by 2020, and a House version of that bill (Markey-Platts). (Earlier post.)

Resources:

Comments

Jim G.

http://www.msnbc.msn.com/id/21012480/site/newsweek/page/2/

Newsweek: In July, you told C-Span that you “sincerely doubt” that Americans are willing to pay the cost of a carbon tax.
Dingell: I maintain that view today. I think Americans, when they find out what this is going to cost, are going to be very, very unhappy. And people like me who are telling them that certain things should be done if this is a problem are going to descend upon me.

john schreiber

The purpose of this proposal is to drive demand for the next cycle of vehicles out of Michigan. Diesel is omitted as a red herring as there are few of them in service among the masses. GM has a lot of diesels in europe and I think Ford may also.

Bill Young

John S,

I don't agree with exempting diesel but it is very important to the trucking industry what the level of taxation is on diesel fuel. A $0.50 tax on diesel would profoundly disrupt shipping.

I think Dingell's motives are to make this proposal so onerous that everyone will object but I think, with tweaking, he has stumbled on to something that would work to profoundly reduce CO2 emissions in this country.

Bill

Bill

Mort

I fail to see how giving those maggots more money will change anything. If they want to raise taxes, tax the wealthy and the oil corporations. Instead they give money to the wealthy, a group which uses a disproportionate amount of fuel per capita. Congress has stolen all the money, bankrupted this country, and now they want to raise taxes on the little people with a feel good tax? Why don't they stop flying themselves, since they care so much?

Eric S

Keep in mind - any added tax - whether directly on fuel or on carbon - will be passed to the consumer. Think of it this way:

A supplier serving 1 Wal-Mart Dc 3 times a week at 600 miles from origin will create 378 tons of CO2 a year. That is an added cost of $18,890 - or $121 / load. Depending on the product - this could mean dollars per unit of added cost, or cents. Either way - in a volume based consumer society that we have that cost will be passed on to the consumer.

Achieving competitive advantage at being 'green' will lead to lower prices to the consumer - and typically thus a larger market share.

The tax will drive companies to be more efficient, and thus emit less CO2.

J

This is awesome!

This is just what we need.
Go for it John Dingell

Joseph


The problem with this is that I have no choice but to pay the tax. I have Zero options, and that is not fair. The Boston tea party was not about taxes it was about unfair taxes.

Nate

Hal,

Remember its actually a tax on carbon dioxide, not carbon - thats just a nickname or shorthand for a carbon dioxide tax. You would have to multiply that by 3.67 to get the weight of carbon dioxide made from carbon, because you're not counting/weighing the oxygen attached to the carbon atom. So more like $0.48 per gallon.

Not a surprising mistake to make when people refer to 'carbon emissions' taxes rather than 'carbon dioxide emissions' because it's less to write.

Nate

Eric S

The EPA standard for burning one gallon of diesel is 22.2 pounds of CO2. So I would bet that the real tax will be $.56 / gallon. A firm could pay to have their specific fleet they use evaluated to determine if they are not at this figure... but most likely companies will end up opting to pay the standard rate.

Once agin I write from the myopic view of industry.


Rafael Seidl

@ Joseph -

do you get to choose if you pay income tax or not? Or sales tax? Or a myriad other taxes, including the $0.184 per gallon that's already being collected for every gallon of gasoline you buy.

A higher fuel tax is in fact something you can reduce by changing your driving style, the amount you have to drive and the vehicle model you do it with. Similarly, the carbon tax will have to be paid by power stations and industrial users. They can make intelligent investment choices so they won't have to raise prices (by as much).

As a consumer, if you live in a state with deregulated electricity supply, you can probably already purchase your juice from a utility that produces renewable electricity. That's more expensive to produce, but it won't be subject to carbon taxes. You'll still pay more than you do today, but the delta will be smaller and you'll be supporting sustainable technology rather than earmarks or social programs.

So you see, a carbon/fuel tax combo does give you choices. They are only unfair if you are a low earner and there is no compensation for your higher expenses. Rep. Dingell proposes a expanded social program to address that, I suggested cutting other taxes (e.g. sales tax) instead.

Hal

I don't know why anyone would assume that Dingell's tax is $50 per ton of CO2 rather than $50 per ton of carbon. The two are not the same and there is no reason to turn one into the other. Both terms are used in various analyses in the literature, which can lead to confusion if the distinction is not kept clear, but they are certainly not the same. I have never seen a tax or cost proposal expressed in one form when the other is meant.

For one example of usage, see the Wikipedia entry on carbon tax http://en.wikipedia.org/wiki/Carbon_tax :

"Peer-reviewed estimates of the [social cost of carbon] for 2005 have an average value of US$43 per tonne of carbon (tC) (i.e., US$12 per tonne of carbon dioxide) but the range around this mean is large."

Note that this might also be an indication of where the value $50/tC came from, and further note that it would certainly not justify $50/tCO2.

Dingell's web page at:
http://www.house.gov/dingell/carbonTaxSummary.shtml
very clearly states: "$50 / ton of carbon (phased in over 5 years and then adjusted for inflation)". If he wanted his tax to be $50/tCO2 he would have said so. It's a factor of 3 difference. These documents are drafted by his staffers who have detailed knowledge on these specific topics and I see no reason to assume that they would have made such a blunder as to get his tax wrong by such a factor. You might as well worry that maybe they meant Hong Kong dollars rather than American dollars, that would change it by more like a factor of 8.

Joseph


Please take I,me,my as consumer X


"do you get to choose if you pay income tax or not? Or sales tax? Or a myriad other taxes, including the $0.184 per gallon that's already being collected for every gallon of gasoline you buy."

So your saying this is a Social Tax, because more taxes is what we need.

"A higher fuel tax is in fact something you can reduce by changing your driving style, the amount you have to drive and the vehicle model you do it with."

I’m already driving the best mpg model that will fit me, my wife, two car seats and groceries for under 25k. My wife and I carpool as much as we can. The price of gas has more than doubled over the past couple of years, it didn’t change the # of miles between my house and work. The property values near where I work are outrageous and the school system is not that good. Doing 80 mph on the freeway waists gas, everybody knows that already. Although prices have gone up fuel consumption has not gone down. How will this change that?

"Similarly, the carbon tax will have to be paid by power stations and industrial users. They can make intelligent investment choices so they won't have to raise prices (by as much)."

As long as no-one complains about it being nuclear or the bird killing windmills or acre eating solar arrays.

"As a consumer, if you live in a state with deregulated electricity supply, you can probably already purchase your juice from a utility that produces renewable electricity. That's more expensive to produce, but it won't be subject to carbon taxes."

I Don’t, I can’t and It will. So my electrical costs will go up too.

"You'll still pay more than you do today, but the delta will be smaller and you'll be supporting sustainable technology rather than earmarks or social programs."

Really, the first 3 programs funded per the article are:
• Medicare and Social Security
• Universal Healthcare (upon passage)
• State Children’s Health Insurance Program

"So you see, a carbon/fuel tax combo does give you choices. They are only unfair if you are a low earner and there is no compensation for your higher expenses. Rep. Dingell proposes a expanded social program to address that, I suggested cutting other taxes (e.g. sales tax) instead."

No, I don’t see. Have they invented a descent family car for under 25k that would not be subject to this tax. I’m not considered poor and have never qualified for any Social Program. However, my property taxes have gone up so much this last year that I need every penny. The disposable income I used to have is gone.

George

Joseph writes: So your saying this is a Social Tax, because more taxes is what we need.

Changed behavior is what we need. There are already plenty of economical cars for a family of 4 that get good gas mileage. The next time you buy a car, maybe you will consider them if the price of gas is higher. If your property taxes are too high, maybe you need to move to a more affordable home.

George

Hal, Dingell's website linked in the article says this:

A tax on carbon dioxide emissions:

$50 / ton of carbon dioxide (phased in over 5 years and then adjusted for inflation)
Coal, including lignite and peat
Petroleum and any petroleum product
Natural gas

By my reading, it raises the price of gas about a buck a gallon; $.50 for the gas tax and about the same amount for the carbon tax. Frankly, it's a great plan, but given that he's Detroit's boy, it seems like it must be planned to fail. (Unless he knows that something worse is in the works.)

Hal

George, you're right, it does say that now. I quoted that same page word for word yesterday without editing in any way, and at that time it said "$50 / ton of carbon". Today it says "$50 / ton of carbon dioxide". The modification date on his web page is this morning. They must have changed it between yesterday and today.

Hal

I don't know how long it will last before it is updated, but the Google cache of Dingell's page still has the "ton of carbon" language:

http://72.14.253.104/search?q=cache:IWUIO5t_L3IJ:www.house.gov/dingell/carbonTaxSummary.shtml+http://www.house.gov/dingell/carbonTaxSummary.shtml&hl=en&ct=clnk&cd=1&gl=us

sjc

"Changed behavior is what we need..."

I agree, but we all have to change behavior, not just the rich or poor or when it is convenient.

If there is one thing that the California electricity mess of 2001 taught us is that we can reduce consumption 10% right away with behavior changes. It requires effort by everyone, but we did it. Maybe that is just the unifying force that we need right now.

Hal

Surprise, surprise. I just checked Dingell's website again today and it has changed back to $50 per ton of carbon! Unbelievable!

http://www.house.gov/dingell/carbonTaxSummary.shtml

The Google cache link I posted two comments above is right now showing the previous version with tons of carbon dioxide.

Boy, this makes Dingell's staff look like a bunch of incompetent morons. They must know that there's a difference or they wouldn't keep changing it! Or maybe the detractors are right and this is all a campaign to introduce fear and doubt about carbon taxes, and the constant changes are a calculated plan to sow confusion. Maybe the web site is programmed to randomly say ton of carbon vs ton of carbon dioxide.

Anyway it's the difference between 40 cents a gallon and 13 cents a gallon, which is pretty significant. Hopefully they'll settle on one or the other eventually.

Hagar

What a terrible idea. The democrats really are going to derail America in it's attempt at energy independence.
What a shame!

Hagar

The democrats strategy of derailing viable options and only focusing on reducing energy consumption is an assured failure. What we need is new renewable fuel sources not decreased energy consumption. Energy consumption will only go one way..up. More people equals more energy consumption. How can they not understand this basic fact?

Hagar,

Well, even dropping the CO2 global warming thing, you might think about it a little differently if you consider how much energy is needed to get a 200 lb person down the street, versus how much energy it takes to send 2000 lb of steel along with that person, as happens in a vehicle. Then consider that most of the energy in your gasoline gets wasted by the engine as heat, not motion. That's what we get for the privilege of paying for foreign oil. There are huge opportunities for savings and efficiency there that, in a world running up against a future oil shortage may spell the difference between transportation for some or transportation (and heat and lighting etc) for significantly more. And the auto companies leaders should and possibly do see that it's to their long term advantage, but they haven't jumped on it up to now because they focus more on the quarter-to-quarter.

Monte

I am all for making tough choices when it comes to ensuring national security and human safety. But this is not it.

I believe the case has been made that humans have significantly increased CO2. However, 30% of 380 ppm is still a very small number, and when viewed together with all other greenhouse gases comprises less than 1% of the greenhouse effect.

Lets be honest- this is all about forcing a giant step forward in societal engineering, limiting citizens' choices and liberties in the name of socialism, and, of course adding more Purina Pork Chow to the Washington menu. Let's not be afraid to admit the truth and let the American people weigh in on the matter. Some may agree that slowing our economy, increasing inflation, and wearing a thicker sweater and mittens around the house is the way to go.

Honestly, if we make these sacrifices thinking that we are saving the planet, we are simply burning dollars needlessly. Despite what the media, the UN, and Hollywood may have to say, the case has NOT been made that CO2 increases are warming the planet.

Personally, I find the following honesty refreshing, albeit a bit sinister:

"Even if the theory of global warming is wrong, we will be doing the right thing -- in terms of economic policy and environmental policy."

Tim Wirth , while U.S. Senator, Colorado.


"No matter if the science is all phony, there are collateral environmental benefits.... Climate change [provides] the greatest chance to bring about justice and equality in the world."

Christine Stewart, Minister of the Environment of Canada

Surprise- saving the planet is a ruse. It is about power, politics, and pesos.

Jim G.

Be honest, Monte? OK. What does "socialism" have to do with the price of beans in Antarctica? Be honest, now.

Paul P. Fenton

A carbon tax would result in higher prices for consumers as business will pass costs on. We damn well know that for a fact. Give money to the governemnt and they waste it on pork or corruption. Give it to the UN is absolutely NUTS!

Yes, we need to stop emissions of carbon but a lot of what is going on here on earth (warming) is going on in the Martian atmosphere too. Point being; the sun is melting ice on Mar and there is not polluters there.

I believe all this "green" is mostly BS. If you want to reduce carbon, kill off a few billion people from the face of the earth. Less people equals less consumption and less carbon emissions.
I hate taxes. I pay too much already and get very little benefit.

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