SB306 Clean Air Tax or Fee Final Report January 2015 Northwest Economic Research Center College of Urban and Public Affairs

Limiting Carbon Emissions o Regulatory controls o Market mechanisms Carbon cap-and-trade Carbon tax 2 Economy Carbon Tax Revenue Carbon Emissions

Methodology | Modeling Overview 3

Summary o Minimal Economic Impacts with Positive Growth Expected in All Scenarios Tax Could Slightly Decrease Growth Rate o Revenue Use Drives Net Impacts o Significant Emission Reduction and Revenue Generating Potential 4

Estimated Price Changes o Gasoline: ~$0.01 increase per $1/ton carbon price o Natural Gas: 3-31% price increase ($10/ton - $100/ton) o Electricity: 1.5-5% increase ($10/ton) to 17-51% increase ($100/ton) 5

Higher the Price, More Emissions Reductions 6 See Results: Carbon Tax Scenarios for full breakdown of emissions results

Significant Revenue Generated 7 $4550 $4020 $3450 $2350 $1870 $1350 $490 See Results: Revenue for breakdown of revenue estimates

Results | Oregon Economy Basics 2013 Employment = 1,679,377 GDP = $219,590,000,000 Real GDP growth = 4.4% Total Compensation = $97,755,000,000 Population = 3,930,065 Annual State Budget (General + Lottery) = $8.2 billion 8

Employment Still Grows 9

True Rev- Neutral 70/30 100% Corp tax cuts 100% Pers tax cuts 70/30 Corp/Pers Flat dividend Low-income asst., tax cuts, EE Exempt industry Transp. Realloc. Rainy day 100% GF

Revenue Use Options o Tax Rate Reductions o Per Capita Dividend o Government Expenditure o Low-Income Assistance o Targeted Industry Assistance o Energy Efficiency Investment o Transportation Investment 11

Revenue Neutral: Reduction in Personal and Corporate Income Tax Rate, and Transportation Taxes and Fees 12 See Report Appendix II for detailed breakdown of scenario economic impacts

Reduction in Personal and Corporate Income Tax Rates, and Increase in Highway Trust Fund 13

14 Reduction in Personal and Corporate Income Tax Rates, and Increase in Highway Trust Fund

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16 Other Considerations Border Tariffs Non-Combustion Emissions Impact on Tourism Impact on Government Further Research Energy efficiency feedback Increase data detail ImplementationHealth impacts Emissions feedbacks See Further Research and Applications

Conclusions o Significant emissions impacts and revenue generating potential o Economic impacts are small relative to broader economy Differ by region, income, and industry o Possible to offset negative impacts with targeted expenditure or investment