In 2016, Yoram Bauman—stand-up comedian and PhD economist—led a campaign to put a referendum for a revenue-neutral carbon tax on the November ballot in Washington State. The initiative (I-732) would have taxed carbon emissions from fossil fuels, while simultaneously lowering the retail sales tax and manufacturing taxes and matching the federal EITC. Washington’s voters rejected I-732, with 41% in favor and 59% against. I document the political life and death of I-732 based on media accounts, interviews with key players, and analysis of the final election results and pre-election polling data. I find that precinct-level support for I-732 is highly partisan: regression results imply 67% support among Democrats and Greens and 7% support among Republicans and Libertarians. Out-of-sample forecasts imply that no other U.S. state would have passed I-732. Polling data indicate that 25% of voters in both parties were still undecided in the weeks leading up to the election, that men and college graduates of both parties were more certain of how they planned to vote (in line with their party affiliation), that support is not correlated with income (conditional on party), and that framing the policy in terms of “fighting climate change” likely prompted otherwise uncertain Democrats to support the policy and uncertain Republicans to oppose. At least two dozen elected officials expressed support for I-732: three were left-leaning Republicans, while the rest were Democrats drawn from across the ideological spectrum. Ironically, the state Democratic party and leading environmental advocacy groups in Washington all opposed I-732, citing worry that I-732 would lose revenue and weak polling for I-732 relative to various carbon tax-and-spend schemes. I conclude by discussing lessons-learned for future carbon tax efforts and additional research needed to support such endeavors.
Past Faculty Workshop•May 16, 2017
Soren Anderson, Michigan State University
Who Joined the Pigou Club? A Postmortem Analysis of Washington State's Carbon Tax Initiative I-732