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Environment & Energy Report

Carbon Tax Would Offset Payroll Tax Cuts in Republican’s Bill

July 23, 2019, 9:10 PM

Rep. Francis Rooney (R-Fla.), who in the past has backed carbon tax bills backed by Democrats, plans to introduce his own legislation July 25 that would use the revenue from a carbon tax to cut U.S. workers’ payroll taxes.

Rooney’s focus on payroll tax cuts would differ from other carbon tax bills proposed in Congress, including a measure (H.R. 6463 in the 115th Congress) he backed last year by former Rep. Carlos Curbelo (R-Fla.) to steer carbon tax revenue to fix U.S. roads, bridges, and other infrastructure. Curbelo was defeated in the November election.

“The broad strokes” of Rooney’s go-it-alone bill “are using a carbon tax to pay down payroll taxes,” Corey Schrodt, Rooney’s legislative director, said at a July 23 carbon tax forum held by the Alliance for Market Solutions, a group soliciting GOP support for a carbon tax.

“Cut carbon and not wages is what we are looking at,” Schrodt said.

Rooney’s bill would set a $30 per metric ton carbon tax on fossil fuel producers and large industrial emitters.

Research, Energy Costs

In addition to a nearly 1% payroll tax cut, the carbon tax revenue also would fund clean energy research and development and shield low-income households from increased energy costs.

A carbon tax in general could raise $1 trillion or more over 10 years, according to Congressional Budget Office estimates. But carbon tax legislation is dead on arrival in the Republican-controlled Senate. Still, advocates hope to lay the groundwork should Democrats take Senate control in 2020.

Other carbon tax measures expected soon include one by Rep. John Larson (D-Conn.). Larson plans to reintroduce carbon tax legislation July 26.

His 2017 bill, the America Wins Act (H.R. 4209) set an initial carbon price of $49 per ton.

The leading Democratic House bill (H.R. 763) on the topic so far was introduced in January by Rep. Ted Deutch (D-Fla.). The bill has 58 cosponsors, all Democrats except for Rooney.

The Deutch measure, the Energy Innovation and Carbon Dividend Act, would impose an initial $15 per ton fee on the carbon content of fuels including crude oil, natural gas, and coal, with that tax increasing at a rate of $10 per ton per year.

To contact the reporter on this story: Dean Scott in Washington at dscott@bloombergenvironment.com

To contact the editors responsible for this story: Gregory Henderson at ghenderson@bloombergenvironment.com; Renee Schoof at rschoof@bloombergenvironment.com; Rob Tricchinelli at rtricchinelli@bloombergenvironment.com