I-732 Compromises Correctly

Raise taxes and make liberals happy. Lower taxes and make conservatives happy. Offer more tax rebates and make working families happy. Cut taxes for manufacturers and make industrialists happy. These tax reforms may sound like the promises of four different legislators, each competing with the other for the most votes. But, as it turns out, it is just one piece of legislation.

Initiative 732 is new piece of legislation proposed by a grassroots group known as Carbon Washington. After generating over 362,000 signatures, I-732 was sent to the Washington State legislature, where hearings are underway.

The initiative would add a tax on all fossil fuel purchases such as gasoline, coal, natural gas, petroleum products, and propane. The group hopes to properly incentivize individual consumers as well as, and especially, large corporations, to seek out and utilize clean, renewable energy sources, such as solar power and wind power.

However, this isn’t your typical tax increase. The increased price of fossil fuels would be offset by a full percentage point reduction in the state sales tax, which currently sits at 6.5%.

The increased revenue would fund the Working Families Rebate, which, as founder Yoram Bauman told me via e-mail, would match 25% of the Federal Earned Income Credit, providing a tax rebate of $1500 to families who qualify. According to the website Budget and Policy, between 11% and 13% of families in Pierce County would have qualified for this tax rebate in 2006 and 70% of these families had two or more children.

I-732 would also nearly eliminate the Business & Occupation Tax for manufacturers. Carbon Washington hopes this will increase the likelihood that companies manufacture their products in-state, rather than out of state or overseas in places which may be subject to little or no environmental regulations. The proposal also allows a temporary tax exemption for fuel used in farming and public transportation in an attempt to avoid putting an unfair burden on local farmers and the poor.

The Alliance for Jobs and Clean Energy, a coalition that has tried to pressure the group into abandoning their legislation in favor of an unspecified alternative, argue that I-732’s claims of revenue neutrality are false. When Democratic State Representative Reuven Carlyle requested an analysis by nonpartisan legislative staff, they found that the initiative would cause the state to lose $675 million in revenue over four years. The Alliance wants to create its own initiative, in which only the largest polluters would pay a fee for each ton of carbon dioxide released. The money raised from this fee would then be invested into clean energy. The group is perplexed by I-732, as having two initiatives on the ballot might give the environmental movement a divided and unsure appearance to voters.

Initiative 732 is a compromise, that much is clear. Conservatives may balk because it imposes a new tax, increasing prices for drivers, households, and manufacturers. Democrats may balk because it represents a tax cut, which may decrease the net revenue the state brings in and lead to budget cuts in education or social services. But this mutual dissatisfaction is precisely why I-732 represents good legislation. The two parties’ platforms are mutually exclusive and have been for decades. If a piece of legislation thrills Democrats, it enrages Republicans, and vice versa. If partisan legislation is passed, the other side spends countless hours trying to “undo the damage.” If achieved, this only leaves the state right back where it started, minus a few million dollars in wasted time, of course. Good legislation should bother both sides. That’s how you know it is truly a compromise. That kind of legislation—the bipartisan kind—should have the best hope of getting passed and the best hope of staying passed.

Courtesy of Sightline.org

Courtesy of Sightline.org

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