Colby Cosh: The State of Washington falls between two ferns on carbon taxation

In Tuesday’s midterm elections, voters in Washington state rejected a carbon tax initiative for the second time in two years. In November 2016, Washingtonians voted 59 per cent “No” on Initiative 732, which would have created a US$15/ton carbon price. This time out they were asked to support Initiative 1631, which (unless negated by the state legislature) also would have implemented a carbon price of US$15/ton.

The second initiative did a little better, meeting with a 56 per cent “No” vote. Is this to be regarded as encouraging environmental progress, or a sign of futility? No U.S. state has adopted any sort of carbon levy yet, though California and New England states have cap-and-trade schemes for emissions credits.

The ballots in Democratic-dominated, green-friendly Washington have been regarded as an important test case for carbon pricing in the U.S., and George Mason University economist Tyler Cowen wrote about the latest defeat in his opinion column for Bloomberg News on Thursday. Cowen has the conventional economist’s view of carbon taxation: it’s the most market-friendly, hands-off approach to reducing emissions, and the revenue can be used to replace or eliminate more obviously harmful taxes. (Opponents of carbon taxes complain that they are a “tax on everything,” which is comically backward: it’s the income and consumption taxes we use to finance the state now that are taxes on everything, almost explicitly.)

Unfortunately, Cowen concludes, the economists’ arguments do not seem to be working. On the global scene, porky subsidies for renewable energy infrastructure and research are much more popular than carbon levies. Australia introduced a carbon tax and then repealed it; Cowen, being someone who rarely misses a trick, has noticed that the same sort of reversal might be in the works in Canada. He thinks the fundamental problem, at least in the U.S., is that a carbon tax is seen as a “new tax burden” by a suspicious public even when it is designed to be revenue-neutral.

In this Aug. 7, 2018, file photo, empty envelopes from Washington state’s primary election are shown stacked at King County Election headquarters in Renton, Wash. The crowded state ballot for the Nov. 6 midterm election included four initiatives, including one calling for a carbon price of US$15/ton.

Given what has happened to revenue-neutral carbon taxes in B.C. and Alberta, perhaps they could hardly be blamed for this. But Cowen adds: “For all the talk about disillusionment and cynicism in American politics, this view represents a strange kind of optimism. If this issue really is so important, some voters must be thinking, surely you politicians can find a way to solve it without making us pay for everything. Don’t we give you enough money already?”

The truth is that the Washington votes might be decent news for carbon taxation as a cause after all. You need about a quarter-million signatures to get an initiative onto the state’s ballot in the first place, and advocates of a carbon tax pulled this off twice. Both initiatives got more than 40 per cent of the vote even though they lacked design features of the Canadian ones they were consciously imitating.

The plan that Washington voted on in 2016 was designed to be revenue-neutral: if it had passed, the state’s sales tax would have been cut from 6.5 per cent to 5.5 per cent, the state business tax would have been all but eliminated, and the earned-income tax credit for low-income households was to be sweetened. There was, in short, a little something for everyone. Naturally, nobody was happy. State auditors concluded that the tax cuts would actually be a little larger than the revenues from the carbon levy at first, so the left and the labour unions in Washington state freaked out about austerity, and joined Kaiser Aluminum and the Association of Washington Business in opposition. The state Democratic Party itself issued a statement calling the ballot measure “poorly written” and saying “we cannot support their approach.” Even the Sierra Club called for a No vote.

The 2018 ballot initiative was a sort of do-over. Initiative 1631 wasn’t a revenue-neutral tax with breaks elsewhere in the state budget: instead, all of the money — an estimated US$2.2 billion over the first five years of the tax — was to be handed over to a public oversight board for earmarked investment in environmental projects. This time out, labour and social justice groups, as well as the state Democratic Party, were pulling together with advocates of the initiative. But the business groups left alone in opposition in 2018 could point out, and did point out, that the proposed eco-fund included spending for air and water quality measures and “forest health”: there were, to quote the voters’ guide, “no requirements to spend funds specifically to reduce greenhouse gases.”

Doorknob hangers stick out of the backpack of a woman about to head out canvassing for a House candidate on Nov. 5, 2018, in Issaquah, Wash.

What this suggests is that when carbon taxation comes directly before the public for a vote, it is awfully easy for environmentalists and leftists to get distracted. Sometimes these people are castigated for having large houses, big families, and busy international travel habits: failing, in short, to behave individually as though atmospheric carbon output were really a compelling planetary emergency. Well, in Washington they even failed to act collectively on this premise in an intelligent way. The goal of having a practical, functioning carbon tax to serve as an example for other states surely ought to have come ahead of everything else — unless all of this is nothing more than theatre.

• Email: ccosh@postmedia.com | Twitter:

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