The American Enterprise Institute provided the venue on July 26th for Senators Sheldon Whitehouse (D-RI) and Brian Schatz (D-HI) to introduce this year’s version of their bill to tax carbon dioxide emissions. A companion bill was introduced in the House by Representatives Earl Blumenauer (D-OR) and David Ciciline (D-RI).
The American Opportunity Carbon Fee Act would put an initial tax of $49 per metric ton of carbon dioxide equivalent and raise the tax every year by 2% above inflation. The bill would use some of the revenue raised to provide $550 refundable credits to taxpayers, some to lower the corporate income tax rate from 35% to 29%, and some to provide grants to states for various programs. The bill would also create a border adjustment system that would tax imports from nations that do not have comparable carbon taxes and refund taxes on exports to those nations.
In his remarks, Sen. Whitehouse thanked AEI for helping launch his bill and then pleaded for Republican support on the grounds that all thinking Republicans already support a carbon tax: “Virtually every person on the Republican side who has thought the climate change problem through to a solution has come to the same place: price carbon emissions to encourage cleaner energy and return the revenue to the American people. Former Treasury Secretaries Baker, Shultz, and Paulson; former EPA Administrators Ruckelshaus, Thomas, Reilly, and Whitman; and leading economists and former presidential economic advisors Arthur Laffer, Gregory Mankiw, and Douglas Holtz-Eakin, all support a revenue-neutral, border-adjustable carbon fee. That’s what we do. Former Republican Congressman Bob Inglis described our proposal as ‘an olive limb, not a branch, in pairing a carbon tax with corporate tax reduction’ and ‘an opportunity for conservatives to show how free enterprise can solve climate change.’”
After Senators Whitehouse and Schatz spoke, AEI held a panel discussion moderated by AEI resident scholar Aparna Mathur. Speaking in favor of a carbon tax were Adele Morris of the Brookings Institution and George Frampton of the Partnership for Responsible Growth; and speaking against were Veronique de Rugy of the Mercatus Center and me. AEI also recorded a podcast with Frampton and me, which can be found here.