Climate change has much more to do with social justice than you might think. One connection is that global warming will hit the poor harder than the rich, so there is a social justice benefit to reducing carbon emissions. Climate action will also provide co-benefits such as reducing emissions of local air pollutants like particulate matter and sulfur dioxide that disproportionately affect low-income communities and communities of color.
A third way that climate policy affects social justice is as fiscal policy. This is especially important for Washington state because we have the dubious distinction of having the most regressive state and local tax system in the nation according to the Institute for Taxation and Economic Policy (ITEP).
Surprisingly, climate policy can reduce the regressive impacts of the tax system on low-income households. In particular, passing the Carbon Washington revenue-neutral carbon tax proposal (Initiative 732) will be the biggest improvement to the progressivity of the Washington state tax system since the 1977 ballot measure that exempted groceries from the sales tax.
The secret is to use carbon tax revenues to reduce the tax burden on the lowest-income households in Washington state. This is what the Carbon Washington policy does: It reduces the state sales tax by a full percentage point and funds a 25 percent Working Families Rebate.
To a first approximation, the household impacts of the carbon tax and the sales tax reduction offset each other: Most households will pay a few hundred dollars per year more for fossil fuels and a few hundred dollars per year less for everything else. (For details, check out the UW’s carbon tax swap calculator at carbon.cs.washington.edu.)
That leaves the Working Families
Rebate, a state-level bump-up of the federal Earned Income Tax Credit (EITC), which is a refundable tax credit that benefits low-income working households. The maximum credit ranges from $500 for households without children to more than $6,000 for households with three or more children.
Twenty-five states provide local bump-ups of the federal EITC. In 2008, Washington state created a 10 percent bump-up called the Working Families Rebate, but it has never been funded. The Carbon Washington proposal ensures that it gets funded and boosts the bump-up amount to 25 percent, a level that will provide up to $1,500 a year for 400,000 working families in Washington state. The benefits will vary for different households depending on family structure.
By reducing the disproportionate impacts on the poor, caused by both climate change and other pollution, while simultaneously tackling the inequities in Washington state’s tax system, Carbon Washington’s proposal can take three big steps forward on social justice.
Alex Lenferna and Yoram Bauman are both members of the Carbon Washington campaign (carbonWA.org) that is currently collecting signatures for Initiative 732. Alex is a Ph.D. student at University of Washington studying the ethics of climate change.
Yoram Bauman is an environmental economist and “stand-up economist.”