Conservatives are conditioned to wince at the mention of the word “tax.” Mention the term “carbon tax,” and many will recoil altogether. Still, in the only place in North America where a carbon tax has been introduced, it has been something of a success. U.S. states in the Pacific Northwest are beginning to take notice.
Canada’s British Columbia introduced a carbon tax in 2008. Designed to be revenue neutral, the tax places a price on carbon dioxide emissions, while simultaneously offsetting the cost of implementation with tax reductions in other areas. Thus, B.C. has been able to cut more than $760 million worth of income and other taxes.
Both Oregon and Washington have decided to study the prospects of implementing their own carbon taxes. In Oregon, the last legislative session saw the narrow passage of S.B. 306, which commissioned a feasibility study. The results of that study are expected later this year, but an interim legislative committee heard testimony last month that left legislators excited by the prospective health benefits of reducing carbon emissions. In Washington state, a study that initially yielded disconcerting results has been revised after the discovery of a methodological flaw. The accurate results forecast that, over its first decade, a Washington carbon tax would have virtually no impact on the state’s GDP while still meaningfully reducing carbon emissions.
The rationales that have excited legislators in Oregon and Washington are not likely to energize conservatives, but that does not mean there are no reasons conservatives might find a carbon tax desirable. Shifting the basis of taxation from income and investment to consumption carries with it a slew of benefits. For one, taxing a harmful activity instead of a desirable activity will better align policy incentives with economic growth.
Long-time conservative tax targets like the death tax and capital gains tax could be eliminated and offset by carbon-tax revenue. Moreover, this could be done while simultaneously complying with the Environmental Protection Agency’s proposed regulations on greenhouse gas emissions in a much less economically destructive way. The absolute cornerstone of conservative support for a carbon tax will be authentic revenue neutrality. Particularly out west, where tax burdens are among the most onerous in the nation, any effort to price carbon without an attendant and commensurate reduction elsewhere will be met with opposition.
To be clear, so long as conservatives remain unconvinced of the threat posed by rising carbon emissions, the environmental value of a carbon tax will escape them. However, if conservatives can be convinced of the value of pegging government revenue to a stable, controllable and ultimately reducible phenomenon, they might just come to the table to discuss climate-change solutions.
Bringing the political right meaningfully into climate-change discussions is essential if the political left hopes to move its climate change agenda nationally. Perhaps Cascadia, with its celebrated history of political collaboration, can lead the way.