Last week, Senator Sheldon Whitehouse (D-RI) and Senator Brian Schatz (D-HI) introduced the American Opportunity Carbon Fee Act. According to the Senators, this bill aims to address concerns regarding climate change, while simultaneously improving economic performance. Specifically, this bill will impose a tax on carbon dioxide emissions.
This tax would be levied at $45/metric ton in 2016 and increase by 2% each year afterward. The tax is targeted at large emitters of greenhouse gases, such as methane, and companies that mine, extract, or import fossil fuels. Over the course of a decade, the Joint Committee on Taxation estimates the total revenue collected would surpass $2 trillion.
The senators plan to use the tax revenue in four ways. First, cut the marginal corporate income tax rate by 6%, from 35% to 29%. Second, provide workers with $500 refundable tax credit against their Social Security payroll tax. Third, increase Social Security, veterans, and disabled Americans benefits by $500, which would be adjusted for inflation going forward. Lastly, the revenue would fund block grants to states to fund programs to help workers of impacted industries transition to new jobs.