Last week, at an event at the American Enterprise Institute, Senators Sheldon Whitehouse (D-RI) and Brian Schatz (D-HI) unveiled the American Opportunity Carbon Fee Act--a carbon tax that places a $49 per ton fee on carbon emissions. According to Whitehouse and Schatz, the tax would be implemented at the point of extraction or importation of fossil fuels and would steadily increase over time. Taxing carbon emissions at the point of extraction would mean that the tax would be placed at the earliest point in the supply chain--during the mining or drilling process used to recover fossils fuels.
The plan's advocates claim the bill will be revenue neutral, as revenues will be used to offset a reduction in the corporate tax rate and to offer workers an annual inflation-adjusted $550 refundable tax credit to offset payroll taxes. The bill also plans to use the carbon tax revenue to deliver $10 billion annually in grants to states to help low-income and rural households and to help workers transition to new industries. In addition to carbon tax credits, the plan also proposes a border adjustment tax to adjust prices of imports and exports so that they also reflect the cost of carbon emissions.
