In 2005, the US
emitted over 6 billion metric tons of carbon dioxide, an increase of 25 million
tons over emissions in 2004.The
scientific community agrees that carbon dioxide and other greenhouse gas emissions
from human activities are influencing changes in the earth's climate.Potential climate changes could have
significant economic and environmental implications for coastal communities,
public health, agricultural productivity, ecosystems and life as we know it.
Currently, polluters have no incentive to change their
behavior and stop contributing to global warming-the America's Energy Security Trust
Fund Act gives them one.Those who
reduce polluting behaviors by cutting back on activities that lead to
greenhouse gas emissions could actually come out ahead by receiving a bigger
payroll tax rebate than they contribute to the fund:they would be rewarded for changing their
behavior.
How would the America's
Energy Security Trust Fund Act work?
This bill would impose a per-unit tax on the carbon dioxide
content of fossil fuels beginning at a rate of $15 per metric ton of CO2 and increasing by
10% each year, also accounting for inflation.The rate is consistent with the broadly accepted goal of reducing
greenhouse gas emissions to 80% below 1990 levels by 2050.The tax would be phased in over a ten year
period to allow industries to adapt.
The tax would be assessed on the CO2 content of these fuels when
they enter the economy:at oil
refineries, coal processing plants and points of import.Therefore it would be easy to implement and
administer-only about 2,000 entities would be taxed.
Demand for fossil fuels would fall in response to a carbon
tax.As a result, carbon emissions would
fall as well, by an estimated 700 million mt of CO2 (12.1 percent). At the same time, demand for
alternative sources of energy would increase, spurring innovation and
competition, and would allow producers of alternative energy technologies to
achieve economies of scale, which will eventually lower prices of that
technology.
The legislation would also:
Provide Tax Credits for Research and Development of Alternative Energy
Technologies like wind, hydrogen fuel cells, solar and other zero emissions
technologies.The first $10 billion or
1/6 of revenue in the trust fund, whichever is less, would be spent each year
to finance tax credits for research and development in alternative energy.
Provide Transition Assistance for Affected Industries: 1/12 of the
fund's revenues would be dedicated to assistance for employees of industries
negatively affected by the resulting shift to clean energy technologies.This would be phased out over 10 years.
Reduce the burden of payroll taxes on working households.The remaining funds would be divided
equally among all individuals subject to the payroll tax to provide a payroll
tax rebate.Seniors and individuals with
disabilities, defined based on eligibility for Social Security, would receive
the same amount.Because $727 billion of
payroll taxes were collected in 2005, a tax at a rate of $15 per ton of CO2 could lower payroll
tax burdens by over 10% on average.
For nearly three quarters of all
households, payroll taxes are the single largest tax to the federal
government.Because the payroll tax is a
flat-rate tax up to a payroll limit of $97,500 it is generally acknowledged to
be a regressive tax. Currently, those in the top 1% of the income scale pay
only 2% of their income in payroll taxes, while those in the bottom 20% contribute
7.3% of income in payroll taxes.Revenues from a carbon tax could be used to reduce the tax burden on
working households, and could have a profound effect on those households with
earnings below the median income level.This rebate would benefit workers in the lower-end of the income scale
the most.