Carbon Tax Reversal in Washington State

Exclusive: Washington State’s rejection of a modest carbon tax – opposed by some environmentalists for not being larger – marks a reversal for what could have been a model for the U.S., writes Jonathan Marshall.

By Jonathan Marshall

Even as voters nationally elected a notorious climate denier as their next president, several environmental groups rallied to help defeat a ballot measure in the state of Washington that would have taxed carbon emissions. It was an historic missed opportunity that should provoke serious reflection about realistic strategies for fighting global warming.

With the possible exception of the rising threat of nuclear war, no issue facing humanity is more urgent than climate change. Yet the world’s second largest carbon polluter, the United States, has consistently failed to take tough national measures to curb its emissions, owing to fierce resistance by the fossil-fuel industry and its conservative allies. Although most Americans believe climate change is real, they are easily spooked into inaction by warnings of higher energy costs or job losses.

Graphic on "The Greenhouse Effect" at the Environmental Protection Agency's Web site

Graphic on “The Greenhouse Effect” at the Environmental Protection Agency’s Web site

That’s why Initiative 732 on Washington’s ballot was so important: It offered a plausible way to bring skittish taxpayers and businesses on board the climate action train by addressing their concerns about the economic costs of environmental remedies.

The $2 billion carbon tax proposal, modeled on a successful tax in neighboring British Columbia, offered a carrot-and-stick approach to effect change. Rising gradually over time, it would have added about 25 cents to the price of a gallon of gasoline and roughly two cents per kilowatt-hour to the price of electricity generated from fossil fuels. Most consumers would have found those “sticks” motivating but not crippling.

The carrots in the measure were a 1 percent cut in the state’s regressive sales tax, near elimination of business taxes for manufacturing to protect jobs, and tax rebates of up to $1,500 for hundreds of thousands of low-income households. Through “revenue neutrality” — giving back the money it raised — the initiative aimed to quiet anti-tax activists. And targeting so many of the benefits to people of modest means, it beat the usual rap that higher energy costs fall hardest on those who can least afford them.

Tax Endorsements

Charles Komanoff, New York-based director of the Carbon Tax Center, called the Washington proposal “fantastic,” saying, “I think it’s really fair and smart.”

The proposal also won over influential Harvard economist Greg Mankiw, former chair of President George W. Bush’s Council of Economic advisers, who said “I’m hopeful that it would become a model for other states, and indeed nationwide. . . . This kind of thing is really the model for where climate policy needs to go in the coming years.”

Many economists believe that using market prices rather than command-and-control regulations to influence energy choices will ultimately achieve the most bang for the buck.

The initiative also won the endorsement of the Audubon Society, famed climate scientist James Hansen, dozens of scientists at the University of Washington, and climate activist Leonard DiCaprio.

On the other side, not surprisingly, the measure earned the militant opposition of Koch Industries, other petrochemical companies and a major utility. They spent more than a million dollars to kill the initiative.

Much more surprisingly, the fossil-fuel lobby was joined in opposition, or non-endorsement, by Sierra Club, Union of Concerned Scientists, Washington Environmental Council, and several other environmental, social justice and health advocacy groups. By dividing the environmental movement, they helped cut the “yes” vote to 42 percent.

Their chief concern: the initiative didn’t raise taxes enough or mandate more spending on renewable energy development, mass transit, affordable housing and community programs. They let their liberal-progressive ideas of the perfect be the enemy of what one MIT energy economist called “by far the most aggressive U.S. proposal” he’s ever seen.

Perfect as Enemy of Good

Opponents did raise legitimate issues, such as whether the initiative set the carbon tax high enough to fully pay for the tax rebates. Critics also questioned, with reason, whether the drafters’ studied attempts to win over businesses and conservatives would actually produce results.

Oil billionaires David and Charles Koch.

Oil billionaires David and Charles Koch.

But some of the criticism was hyperbolic. Naomi “Shock Doctrine” Klein, for example, smeared the carbon tax initiative as “right-wing friendly” and “the policy choice of big polluters.” She further denounced it as “a disastrous precedent that could set back the climate justice movement for a decade,” apparently because it would not immediately “jumpstart an urgent, sweeping phase-out of fossil fuels” or “deliver the massive green energy investments and community-driven solutions we all need.”

Klein and other hard-liners fail to acknowledge some basic truths. First, even voters in liberal Washington may be reticent to approve huge new tax-and-spend programs. Second, slamming residents with really high carbon taxes would ensure the premature death of any such program. A modest carbon tax can be raised over time once voters are reassured that it doesn’t cost jobs or pinch their wallets excessively.

Moreover, purists ignore the fact that a more radical program in Washington, even if approved, would have no direct impact on global warming. The contribution of any one state to the global pool of carbon emissions is minuscule. Only broad, collective action ultimately matters.

Where a state like Washington can make a difference is by showcasing a model approach with broad appeal. A successful and popular carbon tax in Washington might convince other states and other countries to follow suit, just as British Columbia’s successful tax is now spreading across Canada. That’s why Koch Industries and other fossil-fuel interests spent so much to defeat it.

Environmentalists who denigrate anything short of super-progressive policies are living in a thick bubble. In an age when the media barely even acknowledge the existence of climate change, and when voters elect Donald Trump president, we need creative new approaches to combating climate change.

Let’s hope the vote in Washington, rather than closing the door on smart carbon taxes, has, in the words of Audubon Washington’s executive director, “awakened a sleeping giant” in “the fight for commonsense climate solutions.”

Jonathan Marshall is author or co-author of five books on international affairs, including The Lebanese Connection: Corruption, Civil War and the International Drug Traffic . Some of his previous articles for Consortiumnews include “Can Obama Lecture Xi on Human Rights?” “How Arms Sales Distort US Foreign Policy,” “Hiding the Indonesia Massacre Files,” and “Pakistan’s Ticking Nuclear Time Bomb.”

15 comments for “Carbon Tax Reversal in Washington State

  1. Bill Koutalianos
    November 14, 2016 at 22:02

    If the following quote doesn’t make you think twice about a CO2 tax, try checking some satellite temperature data.

    “The common enemy of humanity is man. In searching for a new enemy to unite us, we came up with the idea that pollution, the threat of global warming, water shortages, famine and the like would fit the bill. All these dangers are caused by human intervention, and it is only through changed attitudes and behavior that they can be overcome. The real enemy then, is humanity itself.”

    – Club of Rome,
    premier environmental think-tank,
    consultants to the United Nations

  2. Paul G.
    November 14, 2016 at 15:47

    “Hole blown in budget’, unfortunately Washington has a history of poorly written initiatives, some of which were otherwise potentially good. This appears to be one of them.

  3. John Kincaid
    November 13, 2016 at 00:02

    I voted against. Saving the environment is a wonderful idea but this was presented as a partial solution to our very regressive taxes which really need solved by genuine political will. Do that first.

    Usually Seattle will vote for any stupid tax so maybe others saw problems.
    Sound Transit 3 passed and they don’t even have a real plan. I would have voted to fund planning but not to give an unelected agency a gazilion dollar perma tax. It is sort of pro enviromental but this is also too much for me.

  4. William Gish
    November 12, 2016 at 18:36

    I am a progressive Washington state Democrat who voted against the carbon tax.

    Washington is facing a monumental fiscal challenge due to a court mandated requirement to live up to it’s commitment to fully fund it’s K-12 school funding.

    We don’t have an income tax and the initiative which would have swapped out the carbon tax for a drop in the sales tax, introducing an element of uncertainty that scared off many like me who support comprehensive reform of our state tax system, including an income tax on those most able to pay.

  5. David Smith
    November 12, 2016 at 18:06

    We are at 410ppmCO2 and that means we are locked in for 3C-5C above 1880-1910 average. In both 2015 and 2016 we had increase in CO2 and Average Worldwide Temperature at the DECADAL rate for the 20th century, that’s twenty years of warming in two years. A low estimate for 2016 is 1.22C above 1880’s, we are increasing now at 0.11C annually, so we reach 1.5C by 2017, but what if we get larger yearly increases? We could reach 2.0C at 2020, and that is unimaginable disaster. We have the worst news ever from the Arctic, October 2016 saw zero ice growth for the first time in history. At this point in history no amount of “switching to renewables” or “going vegan” is going to save us. We would need to remove carbon from the atmosphere, but no “carbon capture” tech exists or will exist. The Climate Disaster is not a distant event we have decades to prepare for, it is happening NOW, and you will not recognize The Earth in ten years.

    • elmerfudzie
      November 13, 2016 at 17:40

      David Smith, this is a re-post of a comment I made on October 29: First let’s clear the table and allow me to suggest that the Hockey Stick graph underpinning the climate change myth has been thoroughly debunked, I reference here Papers by McIntyre & McKitrick sharply criticizing the hockey stick curve (M&M) have subsequently been thoroughly validated in their criticisms with additional support, uncovered by the Climategate scandal-Https:// /wiki/Climatic_Research_Unit_email_controversy. The climate change lobby is sponsored by the “scarcity crowd”, of the Rockefeller ilk, who along with the true believers of the late, Maurice Strong, wish to collapse the economies of the USA and other first world nations, then reduce our creative energies into an eighteenth century agrarian economy, with one important exception: the international corporations and their moguls will control, vertically and horizontally, the entire food chain (GMO seeding), growing and distribution rights, all into their consolidated hands. That said, as a nation, we cannot see or wish to acknowledge the depth and pervasiveness of the “death culture” and what amounts to pure nihilism on the part of our corporate and government elites. The push for the oil sands projects and similar extractions off the gulf coast, rests on a hidden decision to drive our economy into collapse and to such an extent, that these oil sources will be ESSENTIAL for moving what remains of this economy forward, once the dollar looses all purchasing power. Our people will need domestic oil source(s), just to get to work and pay the Chinese what we already owe and will continue to owe them long into the foreseeable future. All CONSORTIUMNEWS readers must face, what the only other alternative is and (probably) will be, NUCLEAR WAR, and this may occur soon, for both economic and for previously described, imperial reasons.

      • David Smith
        November 16, 2016 at 06:47

        Relax, “fudzie”, nothing will be done.

  6. michael king
    November 12, 2016 at 11:34

    I share the writer’s belief that global warming, with the possible exception of the rising threat of nuclear war, is the single most important issue facing humanity. I am also a Washington voter who cast a ballot AGAINST the carbon tax initiative. It was a very BADLY written initiative. So badly written that, as a matter of sound global warming policy, it should have been defeated. It’s pricing structure idiotically treated wholesale transactions in electricity by state public utilities, whose power generation base is overwhelmingly hydro-based, as if their power source was entirely COAL based, and punished them accordingly. There were other really dumb aspects I could go into but will not. The public utilities of the state are very much for a properly designed carbon tax, but they could not support this one. This is only a temporary “setback,” and it is not one from which messages about lack of will should be taken. A carbon tax measure without the ridiculous features of the one just defeated will be passed. This is not a case of the best being the enemy of the good. This was bad policy, period.

    • Jonathan Marshall
      November 12, 2016 at 12:49

      Michael, are there any online discussions of the issue of wholesale transactions you can point me to? I saw nothing about that in the extensive analyses of the initiative by the Sightline Institute, nor in other detailed discussions of the pros and cons. Thanks.

  7. Herbert Davis
    November 12, 2016 at 09:38

    A missed opportunity that might have signaled a wake up call…pretty sad.

  8. Al Schechter
    November 12, 2016 at 09:30

    The way to get carbon lessened is to get our butts in gear and develop LENR practical uses. With near limitless, near free, nearly commercialized progress happening now, it’s time to bend taxpayer resources to a job that will yield benefits forever for all of mankind. But no, we just accept carbon emitting fuels can not be usurped, and plod away at ineffective ‘climate change strategies’ to no avail.

    • Jerry
      November 13, 2016 at 16:07

      We do not now have adequate space or safety measures in place for the nuclear or radioactive waste we now have. Assuming that LENR would result in additional nuclear or radioactive waste, where and how would you dispose of it?

  9. Ted Tripp
    November 12, 2016 at 09:24

    First, I always question whether people know what they are talking about when they misuse ‘reticent’ as in “liberal Washington may be reticent to approve huge new tax-and-spend programs.” It appears that there was plenty of discussion about this proposal. Years ago, I saw a Menses ‘word-of-the-day’ calendar where they misdefined ‘reticent’ on my boss’ desk as ‘reluctant’ rather than ‘reluctant to speak, remain silent’. During our daily company meeting, he misused ‘reticent’ time and time again.
    Second, during the Cultural Revolution, there was a play extolling the virtues of “Good Minister Liou” who was the only Qing Dynasty official to care about the people. The play was excoriated and the author imprisoned because a ‘good minister’ only serves to perpetuate the cultural contradictions of the corrupt society. I think that many progressives felt this proposal was a kind of ‘good minister’ that did not attack the fundamentals of climate change, i.e. it was not good enough, and they were not reticent in their opposition.

  10. bfearn
    November 12, 2016 at 07:44

    Something is always better than nothing!!

    • Zachary Smith
      November 12, 2016 at 12:13

      I don’t really understand Mr. Marshall’s point in this essay. Hoping a flawed initiative in a tiny US state (a bit over 2% of the US population) would matter at all is wishful thinking in my opinion.

      Moreover, purists ignore the fact that a more radical program in Washington, even if approved, would have no direct impact on global warming. The contribution of any one state to the global pool of carbon emissions is minuscule. Only broad, collective action ultimately matters.

      I was about to write something like that myself in reply. So Mr. Marshall does understand the situation. Perhaps he is frustrated that even meaningless token efforts are failing. These universal failures are surely a sign of how hopeless a fix we humans have gotten ourselves into. One we’re not very likely to come out of in one piece.

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