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

Oct 26, 2016

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.

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Marc Fogarty

Marc Fogarty, Audit Partner within Technology and Life Sciences Group, and member of the firm'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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