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I-732 Taxes Pollution, Not People

This letter is in response to yesterday’s column in The Stand regarding I-732. The article asserts that I-732 would make Washington State’s tax code more regressive.  While it is true that carbon taxes, by themselves, are regressive, I-732 does much more than impose a carbon tax.

By shifting the tax burden onto carbon pollution and away from regressive and burdensome taxes that hurt families and businesses, I-732 focuses on encouraging cleaner energy solutions and putting money back in the pockets of Washington state families and businesses. Policy changes include:

  • A $25 per ton tax on polluting fossil fuels.
  • A one percentage point reduction of the state sales tax –saving hundreds of dollars per year for each household in Washington.
  • Funding the Working Families Tax Rebate to provide up to $1,500 a year for 400,000 low-income households.
  • Keeping living-wage jobs in our state by lowering the Business & Occupation tax on manufacturing from as much as 0.44 percent to 0.001 percent of gross receipts, effectively eliminating the tax.

The net effect of enacting I-732 is to make the tax code more progressive. See the example below for a family with two children, before and after I-732 is enacted:

Screen Shot 2016-01-31 at 10.56.05 PM

With respect to the question of revenue-neutrality, we believe the Office of Financial Management is wrong and here is why: The analysis understates the carbon tax revenue and double counts the working families rebate. We’ve identified other issues as well which can be viewed here, but the bottom line is that the analysis is flawed and should be corrected. In fact, the carbon tax model that the state uses was previously updated after an earlier analysis by Carbon Washington identified hundreds of millions of dollars’ worth of mistakes.

I-732 has the bipartisan support of economists, scientists, elected officials, business owners and concerned citizens across the state of Washington. While the WSLC disagrees with I-732, it is only fair to disagree based on what I-732 actually does, not on a mistaken view of the facts.

Scientists recently reported that 2015 was the hottest year on record by far. All of us have a moral responsibility to focus on carbon reduction now to protect our children and future generations. That means tackling climate change now, and leaving them a cleaner, healthier, safer world. Economists agree that the best way to do that is to put a solid price on price on carbon. I-732 is our best change at making meaningful progress toward carbon reduction in Washington State, while sustaining economic growth and easing the tax burden for families. For more information about I-732, please visit

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