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
- 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.)