More Evidence A Carbon Tax Would Not Be “Revenue Neutral”

by Rob Roper

Since VPIRG and its allies began pushing a Carbon Tax for Vermont in earnest, they have tried to convince us that the half a billion dollar tax increase would be “revenue neutral,” a term that means any and all increases in taxes would be completely offset by cuts in other taxes.

This is a false claim. First of all, the VPIRG plan calls for returning only 90% of the revenue via some tax cuts and credits, but mostly through new or existing welfare programs. The ten percent skimmed off the top would go to pay for VPRIG priority projects. So, off the bat this is by definition not revenue neutral.

Beyond that misrepresentation, once the state gets its hands on this money is there really any doubt that politicians will find other reasons and causes to spend it on? Honestly, do we think VPIRG would be the only entity allowed to wet its beak in this new pool of money?

Last April, at a press conference led by four legislators who sponsored four different versions of Carbon Taxes, Rep. Johanna Donovan (D-Burlington) said, among other things, “Because we are aware now that we’re going to have a special session in the fall. These will be revenue bills, and if indeed some of the draconian cuts we hear may be coming our way, these [carbon tax bills] are things we could use to raise revenue.” [Emphasis added] (WPTZ, 4/9/17)

More evidence of this attitude surfaced at a recent public meeting of Governor Phil Scott’s Climate Action Commission. Dr. Alan Betts, who served on Gov. James Douglas’ Climate Commission and advised legislators on climate change policy, said “There’s a lot we have to pay for; both mitigation and dealing with Vermont’s issues. A carbon tax is an obvious source for that.” Yes, lots of people are going to see the Carbon Tax as an “obvious revenue source” for lots of things, either wanted or perceived as needed.

Again, you cannot have a “revenue neutral” tax that pays for new initiatives and programs. That’s just math. Nevertheless, as the Carbon Tax warriors gear up for another fight in another legislative session you will hear “revenue neutral” quite a bit. Don’t believe it.

Rob Roper is president of the Ethan Allen Institute. 

{ 2 comments… read them below or add one }

Jim Bulmer September 29, 2017 at 11:55 pm

Tax, tax, tax, tax, so what else is new? These guys will grab whatever excuse is available to suck funds from the folks.

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Jeanne Vittorioso September 30, 2017 at 2:18 pm

I am of the same thought as Jim. I see this carbon tax as another excuse to channel money into something else. I keep hearing on the news that there are so many thousands of families in this state who wonder where their next meal is coming from, and are depending on food banks. So, who is left to pay this tax? What smaller percentage of the population can support the full tax goal? I think someone is bored and keeps thinking up all these ‘brilliant’ ideas. In general, we are all taught to live within our means. The state needs to do the same. The reality is, not too many people can afford $20,000 for a new wood heating system. A tax credit is not going to help much. The state needs more big businesses throughout ALL areas of the state, including NEK, to bring in jobs and revenue. This is my expanded thought on the carbon tax. NO!

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The Ethan Allen Institute is Vermont’s free-market public policy research and education organization. Founded in 1993, we are one of fifty-plus similar but independent state-level, public policy organizations around the country which exchange ideas and information through the State Policy Network.
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