The Leaflet: The Folly of State-Imposed Carbon Taxes

Published May 5, 2017

In November 2016, Washington State voters rejected what would have become the nation’s first carbon tax. In 2017, at least three states proposed carbon taxes, including Connecticut, Massachusetts, and Rhode Island. The proposals each require all three of the states to adopt a carbon tax for them to go into effect. No state has yet to impose a carbon tax, in part due to concerns over their negative impact on the economy and their lack of positive impact on the environment.

According to a report by the Brookings Institution, “The revenues from a carbon tax are subject to a (desirable) erosion of the tax base, particularly over the long run as capital in long-lived power plants and other industrial facilities turns over. States with relatively high coal use in their electricity sectors are likely to experience more emissions abatement than states in which relatively more emissions reductions need to come from transportation.”

A series of Research & Commentaries by The Heartland Institute’s Tim Benson examine these state carbon tax proposals. According to Benson, “The Congressional Budget Office (CBO) found a $28 per ton carbon tax would result in energy costs being 250 percent higher for the poorest one-fifth of households than the richest one-fifth of households. CBO reports the reason for cost discrepancy is ‘a carbon tax would increase the prices of fossil fuels in direct proportion to their carbon content. Higher fuel prices, in turn, would raise production costs and ultimately drive up prices for goods and services throughout the economy … Low-income households spend a larger share of their income on goods and services whose prices would increase the most, such as electricity and transportation.'”

One of the main reasons proponents give for imposing a carbon tax at any level of government is to deter the emission of carbon dioxide, which many carbon tax supporters believe impact global temperature. In a December 9, 2015, speech to the U.N. Framework Convention on Climate Change, former Secretary of State John Kerry said, “The fact is that even if every American citizen biked to work, carpooled to school, used only solar panels to power their homes, if we each planted a dozen trees, if we somehow eliminated all of our domestic greenhouse gas emissions, guess what—that still wouldn’t be enough to offset the carbon pollution coming from the rest of the world.”

A state-based carbon tax alone would have a negligible impact on global temperature, but with Congress unlikely to move forward on a federal carbon tax, there will continue to be pressure by environmental advocacy groups to impose a carbon tax at the state level. 

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