Progressive Groups Warn Congress Against Including Carbon Tax in Reconciliation Package

Five progressive organizations on Tuesday urged top congressional Democrats to exclude a carbon tax from the sweeping budget reconciliation package they aim to pass this week following reports that the policy is under consideration in the U.S. Senate.

"Carbon taxes... do not reduce emissions, they put a squeeze on working families, and they are embraced by polluters."
--Mitch Jones, Food & Water Watch

Given the Senate's current makeup and Democrats' refusal to abolish the filibuster, passing the Build Back Better package is considered essential to delivering on President Joe Biden's climate pledges. Backed by the latest science, progressives have repeatedly advocated against including "false solutions" that impede a just transition away from fossil fuels and exacerbate the climate emergency.

Climate Justice Alliance, Food & Water Watch, Indigenous Environmental Network, Our Revolution, and Progressive Democrats of America made their case for leaving a carbon tax out of the package in a letter to House Speaker Nancy Pelosi (D-Calif.), House Ways and Means Committee Chair Richard Neal (D-Mass.), Senate Majority Leader Chuck Schumer (D-N.Y.), and Senate Finance Committee Chair Ron Wyden (D-Ore.).

While applauding Democratic leaders' efforts to generate the money necessary to combat the climate emergency, the groups warn of the expected harms of such a policy and argue that repealing fossil fuel subsidies "would provide a simpler and more robust revenue stream."

The letter came amid uncertainty over the fate of both the Build Back Better package and a bipartisan infrastructure bill, and just days after Wyden confirmed to The New York Times that in the face of opposition to the party's tax plan from Sen. Kyrsten Sinema (D-Ariz.), Schumer instructed him to craft legislation that would put a price on carbon emissions but also align with Biden's vow not to raise taxes on households making below $400,000.

As Wyden noted to the Times, a carbon tax remains a heavy push politically even if it comes with a dividend that would return a portion of the money to consumers. Of course, the more money returned to consumers in the form of rebates, the less revenue there is to spend on other programs--the point of instituting a carbon tax.

The potential impact that such a policy could have on families with lower incomes is among the concerns detailed in the groups' letter:

The Build Back Better Act is touted as the best shot to address the climate crisis, but it is also an opportunity to address the injustice and harms that fossil fuels bring to Black, Indigenous nations, and environmental justice communities. Including a carbon tax as a pay-for in this spending plan will further our dependency on fossil fuels and undermine efforts to eliminate and reduce pollution in vulnerable communities. Furthermore, this regressive tax will also undermine a key promise of President Biden to not raise taxes on people making under $400,000 per year, an increase that will be felt hardest among low- and moderate-income households who are least equipped to make investments necessary to avoid carbon emissions and these new taxes.

The organizations explain that fossil fuel interests support carbon taxes because they not only sustain but create more dependence on the industry by making social programs--like those proposed in the Democrats' package--reliant on revenue from polluters.

"This perverse relationship," the letter warns, "will cause us to choose between the health of vulnerable communities and our climate or funding government programs, a dichotomy we should avoid at all costs."

"The inclusion of a carbon tax," the letter continues, "would create an inequitable, discriminatory, ineffective, and ultimately regressive proposal that gives a green light for the biggest climate scofflaws to pay to pollute and maintain a harmful status quo."

Food & Water Watch policy director Mitch Jones echoed the letter's warnings and demands in a statement Tuesday.

"Carbon taxes have fallen out of serious climate discussions for good reasons: They do not reduce emissions, they put a squeeze on working families, and they are embraced by polluters as a ploy to look concerned about climate while continuing business as usual," he said.

"If lawmakers are really concerned about holding the costs of this spending bill," Jones added, "they should get rid of the billions of dollars we waste every year on subsidies to polluters."