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A Project of The Annenberg Public Policy Center

More Carbon Tax Distortions

Crossroads GPS claims that Colorado Sen. Mark Udall “voted to enact a carbon tax.” Udall did no such thing. Republican Thom Tillis claims that Sen. Kay Hagan “supported a carbon tax” that would destroy “up to 67,000 jobs in North Carolina over the next ten years.” That’s not accurate, either.

In fact, Congress has never voted on a specific carbon tax proposal. Udall couldn’t have voted to enact such a tax even if he wanted. And the figure on North Carolina jobs comes from a scenario presented by a group opposed to such a tax.

To make these claims, Crossroads and Tillis twist the senators’ votes on amendments to a nonbinding budget resolution. We saw similar distortions early this year, when Americans for Prosperity ran an ad saying Sen. Mark Begich “is on record supporting a carbon tax … that will cost the average family over $2,000 annually.” Begich hasn’t backed a carbon tax proposal, and the $2,000 figure is based on general assumptions, not any specific plan. That figure has been used to attack Hagan, too, in an ad from the conservative advocacy group American Energy Alliance.

No Vote to ‘Enact a Carbon Tax’

Crossroads points to Udall’s March 22, 2013, vote for a budget resolution amendment to require any possible future carbon tax to be revenue neutral, with the money the government would receive from the tax being returned to the American people. In other words, Udall voted to support making a hypothetical tax revenue neutral.

Also, the amendment was to a nonbinding budget resolution, which sets spending and budget guidelines but doesn’t carry any force of law. The amendment was incapable of enacting anything, and at any rate, it didn’t call for the enactment of a carbon tax plan, which would be a direct tax on the carbon content of fossil-fuel energy, such as coal, oil and gas. The goal of such a tax — like other pollution-reduction strategies — would be to lower the amount of carbon dioxide released into the environment.

The amendment, which was defeated by a 41-58 vote, was written by Democratic Sen. Sheldon Whitehouse, who, along with three other Democratic lawmakers, had previously released a “discussion draft” of a carbon tax, asking for comment on how a tax should be priced and structured, and how revenue could best be returned to the public. Whitehouse’s amendment said that all revenue from a “fee on carbon pollution” should be “returned to the American people in the form of federal deficit reduction, reduced federal tax rates, cost savings, or other direct benefits.” So, if such a tax were to exist, the Whitehouse amendment called for the revenue to be returned to the public in some form.

The Crossroads ad, however, goes on to wrongly say that Udall voted for a carbon tax proposal that “could have led to higher electricity prices, squeezing middle-class budgets,” vaguely adding: “A carbon tax could squeeze local businesses and hurt Colorado employment.”

Such a tax could do those things, depending on how it was structured. But, again, Udall didn’t vote on a specific proposal.

In general, a fee on carbon is designed to raise the price of fossil fuels, prompting consumers to switch to renewable energy options and consume less energy, and leading businesses to develop new energy-reducing products and technology. But whether that would lead to “squeezing middle-class budgets” or businesses and by how much depends on many details that would have to be addressed in carbon tax legislation.

And such legislation faces a steep uphill battle amid much political opposition. As Charles Komanoff, director of the Carbon Tax Center, told us in February, “To my knowledge, there has never even been a hearing, even just an informational hearing on anything that is or resembles a carbon tax bill.”

The most recent Senate legislation was introduced by Sens. Bernie Sanders and Barbara Boxer and referred to committee on Feb. 14, 2013. The bill, which called for a $20-per-ton carbon fee with 60 percent of the revenue returned to households, has no other cosponsors and hasn’t moved since. In the House, Rep. Jim McDermott introduced a carbon tax bill on May 28 of this year. It, too, was referred to committee with no action since. McDermott introduced the same bill in 2012, and it died in committee. In addition to the lack of traction of such bills, the White House opposes a carbon tax.

The Crossroads ad cites a study released in February 2013 by the anti-carbon-tax National Association of Manufacturers, which looked at two hypothetical scenarios, finding they would reduce productivity, lower wages and increase the price of fossil fuels. NAM’s scenarios use the revenue from a tax to reduce the debt and personal income tax rates. But the revenue from the tax could also be used to give households rebates, as the Sanders-Boxer bill proposed, or lower corporate tax rates to ease the impact on businesses.

“The ultimate economic effects of a carbon tax, however, would depend on how the revenues from the tax were used,” said a May 2013 Congressional Budget Office report, with deficit or tax-rate reduction lowering the total cost to the economy and other methods directing relief to consumers or businesses.

But, again, Udall didn’t vote to enact a carbon tax — or even to support a specific proposal.

 False Attacks on Hagan, Too

Hagan’s Republican opponent, Tillis, twists another vote on an amendment to the 2013 budget resolution to wrongly claim on his website that the Democratic senator “has supported a carbon tax that would cause gas prices and utility bills to skyrocket, while destroying up to 67,000 jobs in North Carolina over the next ten years.” Tillis’ site refers to “Hagan’s carbon tax” and call this her “energy policy.” But simply reading that Web page shows Tillis doesn’t have support for such claims.

The American Energy Alliance, a conservative group that doesn’t disclose its donors but has been linked to the Koch brothers by Politico, also launched an ad early this month that uses the same supposed evidence to claim that Hagan wasn’t telling the truth when she said she opposed a carbon tax and that she had “worked to make it a priority.”

Both the Tillis camp and AEA point to Hagan’s March 2013 vote against an amendment sponsored by Republican Sen. Roy Blunt to require 60 votes to approve any potential carbon tax in the future. The amendment failed. It wasn’t a vote for a carbon tax; it was a vote against a nonbinding resolution requiring a high threshold for passing such a tax at some unknown point in the future.

There was no proposal that would have “destroy[ed] up to 67,000 jobs in North Carolina” over a decade, as the campaign says. Instead, that number comes from the NAM analysis of two scenarios, and it’s the upper-most estimate for NAM’s high-end scenario. Technically, NAM didn’t say up to 67,000 jobs would be lost. Its figure is for reduced labor income. NAM notes: “This does not represent a projection of the number of workers who may need to change jobs and/or be unemployed, as some or all of the lost labor could be spread across workers who remain employed.”

AEA’s ad also claims that Hagan supported a tax that “could cost the average family over $2,000 a year,” but that figure comes from a January 2013 Heritage Foundation analysis of carbon-tax scenarios presented in the Energy Information Administration’s 2012 Annual Energy Outlook. Heritage’s maximum-impact scenario estimated a cut in income for a family of four of $1,900 in 2016. The scenarios didn’t include any method of returning revenue to the public.

But that’s all a moot point anyway. Hagan didn’t support — or decline to oppose — any specific carbon tax plan with her 2013 vote.

The Tillis camp and AEA provide another weak link to a carbon tax, mentioning a letter Hagan and other freshman Democratic senators (including Begich and Udall) wrote to the Senate majority leader in July 2010, a few months after the Deepwater Horizon oil spill in the Gulf of Mexico. The letter expressed support for comprehensive energy legislation that would include “making polluters pay through a price on greenhouse gas emissions.”

As the Tillis camp acknowledges on its site, the letter didn’t provide any specifics as to whether that policy should be a carbon tax, cap-and-trade or some other method of penalties and incentives. The letter gives general ideas of what energy legislation should include, such as “tax incentives, grants, loans and other assistance to help American manufacturers create jobs, cut their energy consumption, retool for a clean energy economy and remain competitive in the global market.”

For the record, Hagan voted against the Whitehouse amendment, a vote her campaign cited last fall as evidence of her opposition to a carbon tax. The Hill newspaper quoted Hagan campaign spokeswoman Sadie Weiner as saying: “She opposes it (as evidenced by the act she voted against it).” But The Hill noted, as we have, that the “vote was largely symbolic, as the underlying bill was nonbinding. The Whitehouse amendment also didn’t exactly address the concept of carbon tax directly.”

Neither of the votes cited by these groups would have enacted a carbon tax, or even demonstrated support for a certain plan. The votes are distorted in these attacks and then linked to conservative analyses of general scenarios, not proposals that the Democratic senators actually had supported.

— Lori Robertson