First Proposed Carbon Tax in U.S. Has Some Unlikely Opponents

October 26, 2016

By Marc Fogarty

Another major, yet under-the-radar, choice this Election Day is taking place in the state of Washington. Residents will be voting on Initiative 732, which proposes the first-ever carbon tax in the U.S.

Put forth by the group Carbon Washington, I-732 would tax fossil fuel emissions from utilities and refineries at $15 per ton of carbon the first year and $25 in year 2, and place a long-range cap at $100 per ton. For consumers, it would result in a 25-cent increase per gallon of gas and a roughly 5% increase in the cost of electricity. To make the tax more palatable, Washington would reduce the state sales tax by 1%, decrease taxes on manufacturers, and provide additional tax exemptions to low-income families.

Because the proposal is designed to be revenue-neutral, there are concerns that this would deplete the state’s general fund. The Washington State Department of Revenue estimates I-732 could reduce state income by about nearly $800 million over the first six years, which could impact spending on education, health care and public safety. However, Carbon Washington and the Sightline Institute, a Northwest think tank, found that the resulting budget shortfall would be minimal at most.

Predictably, most business groups oppose I-732. Interestingly, however, certain environmental groups, notably the Sierra Club, are also against the proposal. The reason why: There is no mechanism to allocate money back into clean energy programs and green technology.

I-732 is modeled after an initiative undertaken in British Columbia, Canada. Studies have shown that it was helpful in reducing carbon emission without negatively impacting the economy. If I-732 passes, it could provide a model for other states or even the U.S. as a whole. A recent poll showed 42% of voters were in favor of the proposal, 37% were opposed, and 21% were undecided. Stay tuned for our report on the post-election decision!


Election Day saw the proposed carbon tax go down to defeat. While 42% of voters favored the tax, a resounding 52% voted against it. Reportedly, broad opposition stemmed from the unlikely coalition of anti-tax energy companies together with environmentalists displeased with the proposed legislation’s lack of investment in renewable energy.

About Marc Fogarty

Marc Fogarty, Audit Partner and a member of EisnerAmper's Public Companies, Cleantech and International Services Groups. Marc is experienced in public accounting, serving public and private organizations and has presented on IFRS to professional groups.

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