by Ramez Naam, CarbonWA Executive Committee Member.
Carbon Washington’s I-732 is a revenue-neutral carbon tax that:
The people most at risk from climate change are overwhelmingly those of lower income – both those inside our communities in Washington, and those who live in the poorest countries of the world. Social justice starts at home, and extends beyond our state borders. By leading on climate, we help set the standard for rich nations to act on climate change, benefiting those who are most vulnerable locally and worldwide.
Where Are People Most Vulnerable to Climate Change? (source)
Sales taxes are among the most regressive taxes. The poor pay a higher fraction of their income in sales taxes than the rich do. CarbonWA uses most of the revenue raised from taxing pollution to cut these regressive sales taxes. You can see how much those taxes are affected by using UW’s Carbon Tax Swap Calculator: http://carbon.cs.washington.edu
Public transit is vital for our communities. I-732 puts a tax on the carbon pollution from coal, oil, and natural gas. But I-732 phases in this tax very slowly for buses and public transit. In 2019, transit will pay only 1/10th the tax rate of private cars. In addition, CarbonWA will save transit agencies millions of dollars each year through sales tax reductions on the buses and trains they buy. Public transit will continue to serve our communities under CarbonWA.
In addition to cutting the sales tax, CarbonWA funds and expands a program called the Working Families Rebate that will send up to $1,500 a year in cash to 400,000 low-income families in our state. The money will come as a match to their federal Earned Income Tax Credit, the most-effective anti-poverty tool in the country.
The Earned Income Tax Credit (EITC) already lifts tens of thousands of people out of poverty in our state. It encourages work, boosts infant health, improves the test scores of children, increases their odds of attending college, and boosts life-long income of children who grew up in families receiving the EITC.
The graphic at left shows some of these many ways that the EITC helps alleviate poverty. Here’s even more about the benefits of the EITC.
Washington State’s Working Families Rebate is a 10% match to the federal EITC… but it’s never been funded. CarbonWA provides a funding source (carbon tax revenue) and increases the match to 25% to make this powerful anti-poverty tool even stronger in our state.
In total, CarbonWA will send over $200 million dollars a year to low-income families in our state through the Working Families Tax Rebate.
Communities of color in particular will benefit from the Working Families Rebate, which puts more money directly in the pockets of community members.
Here’s more about the benefits of the Working Families Rebate.
Washington State’s current tax code is highly regressive: The poor pay a higher fraction of their income in taxes than the rich. I-732 makes our taxes less regressive and more progressive than they are today.
Today, the lowest earning Washington residents pay the highest percentage of their income in state and local taxes. After the Working Families Rebate, the tax rate on many of the lowest earners in Washington will drop by more than half. Compare the red bars in the graph below (old taxes) to the black bars (with I-732) for a married couple with two children in various income brackets.
You can read more about how CarbonWA advances social justice by making taxes fairer for low-income working families here.
Washington state can’t beat climate change alone. But we can lead. I-732 will be the strongest carbon tax in the world, starting at a substantial $25 per ton, and rising over time to $100 per ton.
By creating the strongest tax on carbon pollution in the world, and doing it by citizen initiative, we can show other states and the world that action on climate is possible. We can embolden citizens in other states to create their own initiatives or push their legislators for climate action that’s just as strong.
Together we can beat climate change!
Talk to your friends and neighbors about I-732