Tax reform may be the last big initiative we will see out of Washington this year. Republican leaders have laid out an ambitious mission to make taxes “simpler, fairer, and lower” for American families, while also lowering tax burdens on small businesses and corporations so they can be more competitive. On the latter front, as the chief negotiators recently outlined in a joint statement, “The goal is a plan that reduces tax rates as much as possible, allows unprecedented capital expensing, places a priority on permanence, and creates a system that encourages American companies to bring back jobs and profits trapped overseas.”
With a sweeping overhaul of the tax code on the horizon, two Senate Democrats believe this is the moment to broach the third rail of climate change policy: a carbon tax.
The plan by the senators, Sheldon Whitehouse of Rhode Island and Brian Schatz of Hawaii, to level a $49 per metric ton fee on greenhouse gas emissions is widely acknowledged as a long shot. But the lawmakers, along with climate activists and a cadre of conservative supporters, insist the tax reform is a way to create bipartisan support. The senators propose to use a portion of the estimated $2.1 trillion they anticipate in carbon tax revenue over the first 10 years to reduce the top marginal corporate tax income rate, something the White House has called for.
The No. 1 reason that a carbon fee (or tax) has political potential is that it offers Congress flexibility. Lawmakers could opt for the Shultz and Summers’s proposal and treat all their constituents to a quarterly dividend. Or they could use the sizable revenue such a fee would generate to reduce the high corporate tax rate or some other tax. Yet another option is to plow that money into infrastructure, aid for coal-dependent communities, clean energy and other priorities.
Like Congress, the business community can also see value in such a fee, as illustrated by the support of General Motors, ExxonMobil, Procter & Gamble and other major corporations. Its simplicity, efficiency and reliance on the free market make a carbon fee superior to other climate-change solutions, and business executives are not in denial about the changing climate. Let’s hope that the business community will use its influence to convince Congress that pricing carbon is not only good for Americans’ health but is also smart economics and smart politics.
William C. Eacho, Washington
The writer is co-founder of the Partnership for Responsible Growth.
Re “At Exxon, Nominee Steered Company’s ‘Evolution’ on Climate” (news article, Dec. 29):
Exxon Mobil supports a carbon tax as the best approach for policy makers because it would ensure a uniform and predictable cost of carbon across the economy, allow market forces to drive solutions and maximize transparency to stakeholders.