Sens. Sheldon Whitehouse (D-R.I.) and Brian Schatz (D-Hawaii) have proposed a bill that would establish an economy-wide tax on carbon dioxide and other greenhouse gas emissions.
“My bill sets the fee for a ton of carbon at $45 in 2016, the central range of the social cost of carbon as estimated by OMB, and would increase it each year at a real 2 percent. When emissions fall 80 percent below 2005 levels, the annual adjustment would fall to inflation,” Whitehouse said at the American Enterprise Institute when presenting the American Opportunity Carbon Fee Act.
Whitehouse, who makes regular speeches on the Senate floor warning about climate change, said the nonpartisan group Resources for the Future has concluded the carbon fee would reduce U.S. CO2 emissions 40 percent by 2025. He explained it is difficult to estimate the impact of the bill internationally. Despite this, Whitehouse told the audience the U.S. should take the lead by reducing emissions.
“This carbon fee would generate over $2 trillion in revenue over 10 years. It is intended to return every dollar of that to the American people,” he said.
The bill reduces the top marginal corporate tax rate from 35 percent to 29 percent and provides workers with a $500 refundable tax credit or $1,000 per couple to offset the first $500 paid in Social Security payroll taxes. Whitehouse said the credit would grow with inflation.
Whitehouse and Schatz encouraged conservatives to support the legislation.
“It would cut back on the pollution that threatens dramatic changes to our home planet, it would cut taxes, it would end a market distortion, it would start a wave of investment and innovation,” Whitehouse said.
“With this bill I extend an open hand, or as one colleague said, an olive limb, to conservatives everywhere. Whether you want to pursue tax reform, support the free market for energy, or as Lindsay Graham suggested this week, accept the effects of climate change, I’m looking forward to working with you.”
Schatz called the bill a “market-based” proposal for reducing carbon pollution. He said British Columbia was able to reduce petroleum consumption more than the rest of Canada without negative impacts on economic growth.
“Some do worry that going it alone on carbon pricing may present some challenges for the American economy but another successful market-based approach in British Columbia shows that you can make an impact without harming the economy, even when jurisdictions around you are not pricing carbon,” he said.