Skip Navigation

Testimony before the Denver City Council Regarding a Proposed Carbon Dioxide Tax

August 26, 2019

Testimony before the Denver City Council Regarding a Proposed Carbon Dioxide Tax

Testimony before the Denver City Council
Cameron Sholty, Director of Government Relations
The Heartland Institute
August 26, 2019

President Clark and members of the Council, good afternoon.

My name is Cameron Sholty. I am director of government relations for The Heartland Institute, a 35-year-old independent, national, nonprofit organization whose mission is to discover, develop, and promote free-market solutions to social and economic problems. Heartland is headquartered in Illinois and focuses on providing national, state, and local elected officials with reliable and timely research and analyses on important policy issues. Heartland would like to submit the following testimony regarding the proposed “pollution tax.”

While this particular tax is aimed at businesses, carbon dioxide taxes are generally an inherently regressive tax and disproportionally harm low-income families. As the Congressional Budget Office notes, “a carbon tax would increase the prices of fossil fuels in direct proportion to their carbon content. Higher fuel prices, in turn, would raise production costs and ultimately drive up prices for goods and services throughout the economy.…Low-income households spend a larger share of their income on goods and services whose prices would increase the most, such as electricity and transportation.”[1]

Based on 2018 figures from Xcel Energy, the Denver Post estimates that the proposed carbon dioxide tax would raise costs for a “typical” small business in the city by about $300 in the first year.[2] The average commercial customer in the city would see costs rise by $1,400, while industrial customers would experience an increase of $3,200.[3] These added costs would be passed along to Denver residents, some of whom literally cannot afford them.

One-fifth of Denver County residents currently live in poverty, in roughly 58,000 households.[4] These households already spend 17 percent of their take-home pay on their home energy bills. Those with incomes below 50 percent of the federal poverty level in Denver County spend more than 31 percent of their take-home pay on these energy costs. Any increase in costs for these people would likely mean the difference between keeping the lights on in the house or living in darkness, between keeping the heat on or living in dangerous cold, between paying the rent or facing eviction.

One other substantial problem with this tax is that it would produce an insignificant environmental benefit. “The effectiveness of a carbon tax as a matter of environmental policy [depends] not only on how it would directly alter the trajectory of [local] emissions but also on its ability to affect global emissions by driving globally applicable technological innovation or by influencing the behavior of foreign governments,” writes Oren Cass of the Manhattan Institute. “On each of these dimensions, the carbon tax fails.”[5] The entire State of Colorado itself, let alone Denver, only accounts for roughly 0.002 percent of global carbon dioxide emissions, a thoroughly insignificant amount.

This tax would make everything more expensive for working families in Denver, drive up costs for businesses, and have an insignificant effect on global carbon dioxide emissions. Mayor Hancock, the Editorial Board at the Denver Post, and a large consortium of businesses, labor unions, and trade groups are urging you to not rush this tax through.[6],[7],[8] Denver residents have already indicated they are opposed to this tax when a similar one failed to garner enough signatures to make it on the 2019 ballot. I ask you to listen to your constituents and heed the advice of the mayor and labor and business leaders. Please do not pass this tax. Thank you for your time. I appreciate you allowing me to speak on this important issue.

For more information about The Heartland Institute’s work, please visit our Web site at www.heartland.org or http:/news.heartland.org, or contact our Government Relations Department at 312/377-4000 or reach them by email at governmentrelations@heartland.org.

 

[1] Congressional Budget Office, Effects of a Carbon Tax on the Economy and the Environment, May 2013, https://www.heartland.org/_template-assets/documents/publications/carbon_one-column.pdf.

 

[2] Andrew Kenney, “Denver council pushes ‘pollution tax’ on business to pay for climate change initiative,” Denver Post, August 8, 2019, https://www.denverpost.com/2019/08/08/denver-pollution-tax-climate-change/.

 

[3] Ibid.

 

[4] Quick Facts, Denver County Colorado, United States Census Bureau, accessed August 21, 2019, https://www.census.gov/quickfacts/fact/table/denvercountycolorado,CO/PST045218.

 

[5] Oren Cass, “The Carbon Tax Shell Game,” National Affairs, Number 24, Summer 2015, https://nationalaffairs.com/publications/detail/the-carbon-tax-shell-game.

 

[6] Letter to the Denver City Council Regarding Climate Change Bills, Office of Mayor Michael B. Hancock, August 13, 2019, https://ewscripps.brightspotcdn.com/59/35/188d551b4a808871b9ca9cf6ea3f/mayor-hancock-letter-to-city-council-regarding-climate-bills2.pdf.

 

[7] “Editorial: Proposed Denver pollution tax is not ready for prime time,” Denver Post, August 20, 2019, https://www.denverpost.com/2019/08/20/editorial-proposed-denver-pollution-tax-is-not-ready-for-prime-time/.