Senate Finance Committee Chairman Ron Wyden (D-Oregon) confirmed today that the Senate majority leader asked him to craft carbon tax legislation to be included in Democrats' $3.5 trillion tax and spend blowout.
Upon the request of Majority Leader Chuck Schumer (D-New York), Wyden is drafting legislation that could create a carbon tax starting as high as $18 per ton and set to increase over time, according to reporting from the New York Times. For context, the Congressional Budget Office has previously estimated that a $20 per ton carbon tax would increase taxes by $1.2 trillion over a decade while the center-left Tax Policy Center found a $20 per ton carbon tax reduces the pre-tax income of households in the lowest income quintile by nearly one percent.
A Clear Violation of Biden’s Tax Pledge
This tax increase would violate President Biden’s pledge not to raise any form of tax on anyone making less than $400,000 per year. A carbon tax would increase the price of gasoline, household energy bills and everyday consumer goods.
Last week, a leaked document from the Senate Finance Committee outlined plans for a similarly described carbon tax that would be paired with a carbon “border adjustment” – a proposal which the Whitehouse has already stated would “raise prices on a host of consumer goods, from cars to appliances, and conflict with Biden’s pledge not to tax any American earning less than $400,000 per year.”
Gas Tax Hike on Steroids, Would Double the Gas Tax in Year One
A carbon tax of $18/ton would roughly translate to a gas tax increase of 18 cents per gallon in year one. A recent study from the Congressional Research Service found that every $1 per ton increase in a carbon tax roughly translates to a 1 cent per gallon increase in the price of gasoline. The current federal gas tax is 18.3 cents per gallon, meaning Wyden’s carbon tax would effectively double the gas tax in year one.
Biden’s own Secretary of Transportation, Pete Buttiegieg, has previously acknowledged that increasing the federal gas tax would violate Biden’s pledge.
“The President’s made a commitment that this administration will not raise taxes on people making less than $400,000 a year,” Buttigieg told Bloomberg Radio’s “Sound On” show in February. “And so that rules out approaches like the old fashioned gas tax.”
Sen. Joe Manchin ruled out a carbon in February
In February, Senator Joe Manchin (D-West Virginia) categorically ruled out a carbon tax while on video during a webinar:
"They want to talk about this as a penalty? Forget it. As long as I'm here and there's 50 votes and it takes 51 to pass it,” Manchin stated.
Democrats passing a carbon tax in the Senate would require a historical flip-flop from Sen. Manchin.