brucet999
Active Member
First, putting a price on carbon absolutely could be done with a tax. But there are political problems with a tax. After decades of people feeling like government is ripping off their money (and, sadly, so many cases of genuine waste, of money redirected from the purpose voters approved to purposes closer to particular politicians' hearts, etc.), taxes are hard for people to sign up for. Even if the tax is small, or the overall burden is less than 40 years ago, or, or, or. In MA in particular, the Republican governor, Charlie Baker, doesn't want to be involved with a new tax.
That said, there is a legal and real difference between a tax and a fee. Although in the public mind they may all be conflated as "tax". So in MA, S.1747 proposes a fee rather than a tax. The fee is paid by the importers of fossil fuels into Massachusetts.
Now, what to do with this money? The cynical among us -- including even me -- would argue that the pot of money is too tempting. We'll start off with a discussion of all the good things we could do with this money and wind up allocating money to feel-good make-work projects. While I'm actually a person who believes that unions serve a useful purpose for their members and society, I'm not enthusiastic about diverting money to the traditional labor agenda, which appears to me to always involve dubious infrastructure projects that are required to hire union-only staff. So Climate XChange advocates -- and S.1747 implements -- a rebate program that returns all of the carbon fee revenue to the individuals and businesses of Massachusetts. OK, all except an administrative program overhead, which we expect to be very small (e.g., around 1% or less).
When we looked at changing the income tax rate downwards, we found that the overall impact on people was very small. It's hard to move the income tax rate downwards in a significant way when the money we're talking about here is small relative to the overall economic pie in MA. I'm making these numbers up but let's say for example that today's income tax rate in MA is 5.95%; maybe we could move it down to 5.90%. That's hardly emotionally or even financially appealing.
So that means that in MA we are pairing a carbon fee with a rebate. Checks will get cut to the residents and to the businesses.
I hope this answer helps.
Also... thanks for your kind words! And thank you for supporting Climate-XChange and our Carbon Pricing Awareness Raffle!
Alan
I don't get how the bill does any good at all. What am I missing here?
As near as i can tell, it would put a tax on imported fuels (calling it a fee is dishonest, since there is no benefit derived from paying that "fee"), thus making them more expensive and then rebate the revenues to state residents, less administrative costs. Businesses don't pay taxes, their customers do, so there would be no reduction in profits leaving the state.
If rebates are allocated per capita, then those who must burn more fuel to earn a living (tractor operators, truck drivers, hot-tar roofers, tradesmen, etc.) and poor people whose older cars burn more gasoline to get to work, will pay more than they get back.
If it is on usage basis, then the compliance burden to get rebates (saving receipts, filling out forms, etc.) will be huge and again the poor who can't afford accountants to help, will get back less than they should. Poor people can't afford electric cars or even hybrids, so to the extent that the carbon tax encourages more efficient vehicles, only the well off will benefit. Poor people also aren't in a position to afford changes in their home heating systems, so once again they would lose.
Whatever the rebate rules, the overhead losses will be much more than 1%. Government just isn't that efficient in the first place and fraudulent rebate claims will eat up a sizable part of the money.