By: Ryan Ellis
Next week, Rep. Carlos Curbelo, R-Fla., will introduce a costly carbon tax bill on manufacturers, and by extension all of us. From a free market perspective, the bill will be an absolute disaster from head to toe, according to details which emerged today on Americans for Tax Reform’s website.
The Wall Street Journal and Curbelo’s own press release indicate that his carbon tax is structured to be a net tax increase. While it will eliminate the $0.184 per gallon federal tax on gasoline, the carbon tax will raise taxes higher (on net?) to the tune of $57 billion to $106 billion per year. Over a decade that’s a trillion dollar tax increase, canceling out the individual tax relief from the 2017 tax reform law. No wonder only six House Republicans voted in favor of a carbon tax this week on the floor (more Democrats voted against a carbon tax than Republicans who voted for it). Failure to pay the carbon tax results in a 300 percent tax penalty.
As the late Bob Novak used to say, God put Republicans on this earth to cut taxes, not raise them.
Curbelo’s carbon tax is a direct tax on manufacturers. The language of the bill reads, “The point of taxation shall be, for products manufactured in the United States, the manufacturing facility.” So much for a manufacturing jobs boom. The Bureau of Labor Statistics reports that nearly 300,000 manufacturing jobs have been created in the past year thanks to deregulation and tax cuts, but that’s history with a big carbon tax on manufacturers. Of course, this manufacturing tax will be baked into the price of every good and service the rest of us buy. A carbon tax is very unpopular because it’s deeply regressive by design. Hillary Clinton’s presidential campaign advisers rejected it as an untenable tax on consumers. Liberal icons like John Podesta (“the polling data on the carbon tax sucks”) and Clinton campaign manager Robby Mook (“it’s lethal”) successfully lobbied Clinton against running on a carbon tax. A carbon tax has run into a lot of opposition in Canada, as well as in places as varied as Australia and even Howard Dean’s Vermont.
On the other side of the political street, 41 conservative groups are on record in opposition to a carbon tax.
Structurally, the Curbelo carbon tax is typical tax-and-spend liberalism. With the extra resources from the net tax increase, the plan proposes throwing money at so-called “infrastructure projects,” which comes right out of the 2009 Obama stimulus playbook. Notably, there are no proposed reforms to Davis-Bacon “prevailing wage” rules, so this is a giant giveaway to Big Labor. Unions will have more money to spend on politics as a result of Curbelo’s carbon tax, reversing the conservative gains just made in the Janus Supreme Court decision.
Free market conservatives are rightly upset with President Trump for raising tariffs, but they also should read the Curbelo carbon tax carefully—it has tariffs as well. There’s a tariff on fossil fuels imported into the United States, and there is separately a tariff on manufactured products imported into the United States. In each case, the Curbelo carbon tax would be applied at the same rate of taxation as if those goods had been extracted or made in the United States.
State carbon taxes would be in our future under this new tax regime, too. States are encouraged under the bill to establish their own carbon taxes (likely as a piggyback to the federal one), and at exorbitantly high rates. That’s because carbon taxpayers (manufacturers and importers) get a 100 percent credit for state carbon taxes paid the first year. There’s a phasedown in the credit after that, but the states by then will have gotten hooked on all the extra tax revenue. The Curbelo carbon tax doesn’t just mean vastly higher federal taxes, but also much higher state taxes.
Who helps run this behemoth tax regime? The EPA has a role along with the IRS. While the bill by statute includes coal, petroleum, and natural gas, the EPA administrator is also given free rein to expand this carbon taxable list of industries at will. Imagine what an Obama administration would have done with that kind of power. Any industry which produces any form of carbon emission is fair game. Before long that’s pretty much the entire U.S. manufacturing sector, and that’s before getting creative about it.
The EPA will have some help, because the Curbelo carbon tax also creates a United Nations NGO-style “National Climate Commission.” If that doesn’t sound scary enough, it also empowers this commission with an unlimited authorization to procure the services of “experts and consultants.” This section of the bill might as well be called the “DC swamp deep state full employment act.” How many of these taxpayer-funded “consultants” would an Obama-like administration use to enforce left-wing policies on the rest of us? We’ve seen this story before with Obamacare “navigators” who were little more than warmed-over community organizers.
All in all, the Curbelo carbon tax is an embarrassment. There’s nothing in here that a Nancy Pelosi or a Chuck Schumer wouldn’t be proud to endorse. The real question is why a Republican member of the tax-writing House Ways and Means Committee is lending his good name to such a terrible venture.
Read more here.