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.
What We’re Working On
Budget & Tax
Research & Commentary: Tax-Cut Triggers Work When Designed Correctly
In this Research & Commentary, Senior Policy Analyst Matthew Glans discusses tax triggers and how the failure of Oklahoma’s trigger should not discourage other states from using them. “Oklahoma’s tax trigger should be used as a cautionary tale against implementing tax triggers without a proper revenue threshold, not against triggers as a whole. Reducing the tax burden on individuals and businesses should be a goal for every state, and tax triggers are one way to accomplish that important task,” Glans wrote. Read more
Health Care
Research & Commentary: Direct Primary Care Can Help New Jersey’s Primary Care Shortage
In this Research & Commentary, Matthew Glans examines New Jersey’s primary care physician shortage and argues direct primary care might serve as a partial solution. “Direct primary care empowers patients and doctors, giving them more freedom to establish and participate in health care provider models that work best for their unique needs. New Jersey should remove unnecessary regulatory barriers to direct primary care and consider including direct primary care in its Medicaid program, similar to a pilot program in Michigan,” Glans wrote. Read more
Education
Arizona Makes Every Child Eligible for ESAs, but Program Caps Remain
In this article for School Reform News, Managing Editor Teresa Mull writes about an expansion to Arizona’s education savings account (ESA) program that was signed into law in April 2017. The law makes all schoolchildren in the state eligible to receive an ESA after a multiyear phase-in period, though the number of children allowed to participate in the program will remain capped. The program will grant parents access to 90–100 percent of the money allocated for their child’s public education, depending on family income, with the average ESA being worth $4,400 per year. ESAs were initially only for children with special needs, but eligibility was expanded to include other students, including children living on Indian reservations and those with a parent in the armed forces. Approximately 3,300 students participated in the program during the 2016–17 school year. Read more
Energy & Environment
Research & Commentary: Rhode Island Carbon Tax Proposal Harmful to State Residents
In this Research & Commentary, Policy Analyst Tim Benson writes about a proposal being considered in Rhode Island that would establish a carbon-dioxide tax on fossil fuels, including gasoline, natural gas, coal, propane, and “any other petroleum product,” starting in 2019. The tax would begin at $15 per ton in the first year and increase by at least $5 per ton each subsequent year. However, the tax would not come into effect until neighboring Massachusetts and Connecticut also pass similar carbon tax legislation. At 17.02 cents per kilowatt hour, Benson writes, Rhode Island currently has the second-highest retail electricity prices in the nation and, at $338 a month, Ocean State residents face the highest total energy costs in the country. A carbon tax, he argues, would make everything more expensive for working families in Rhode Island, who are already pinched by the state’s high costs, leaving them less to spend and save – all without any guaranteed environmental benefits. Read more
From Our Free-Market Friends
New Poll Suggests Surprising Support for Criminal Justice Reforms Among Trump Voters
The Charles Koch Institute released the results of a new poll surveying 1,200 voters concerning their views on criminal justice reform, including civil asset forfeiture, mandatory minimum sentences, and locking up criminals for drug crimes. “The results, which represent responses from a broad range of Americans—including voters who identify as liberals, moderates, and conservatives—suggest significant support for criminal justice reform. Notably, this support even comes from Trump voters: When asked whether criminal justice reform is a priority for the country, 81 percent of Trump voters described the issue as either ‘very important’ (34 percent) or ‘somewhat important’ (47 percent). Trump voters were also more likely to have experience with the criminal justice system, as 54 percent of them reported knowing someone who is or has been incarcerated.” Read more
