Cap and Trade: Tax grab with no benefit

When California passed the so-called AB 32 the “Global Warming Solutions Act” in 2006, it was praised as first of its kind legislation, a model that the world would follow. That has not happened.

The Global Warming Solutions Act established a cap-and-trade program in California. This program sets a “cap” on the amount of greenhouse gas emissions that a business can produce. The state government sells emissions permits to businesses for a specified amount. Businesses can then “trade” these permits with one another to allow more flexibility in meeting reduction targets.

Almost a decade later, the program has grown in the amount of taxes it's grabbed from hardworking Californians with no measurable effect on the environment.

Last year Governor Brown working with the majority party passed legislation redirecting 25% of cap-and-trade funds on an on-going basis to fund the High Speed Rail Project. In the upcoming fiscal year it means $500 million to the project.

Under AB 32 the funds collected from the sale of cap-and-trade credits must be used on projects that reduce greenhouse gas emissions by 2020. Since the High Speed Rail is not slated to be running until 2027, it would seem this violates the law. In fact, this question is currently being litigated.  If the court rules the use of cap-and-trade funds are prohibited, this would leave the California High-Speed Rail Authority without any funding stream.

The Legislature's own budget analysts believe the high-speed rail project will actually increase greenhouse gasses. According to the California High-Speed Rail authority's own estimates, the completed train will reduce road traffic by only 1 percent of current levels, and even less if California's population continues to increase.

Beginning last January the unelected California Air Resources Board decided that gasoline would now fall under cap-and-trade and it has driven up prices at the pump by 12-15 cents per gallon.

There is no arguing that we need to protect California's natural resources. But there is no evidence that that California's cap-and-trade program is having any impact on global warming. Recently Governor Brown admitted that California, the seventh largest economy in the world, is producing less than 1% of carbon emissions.  Emerging countries like China and India are the culprit.

Despite these concerns, the legislature voted this year to extend the cap-and-trade program indefinitely – without requiring any review or evaluation of the program through AB 1288 and SB 32. If there is no evidence that the program is working, there can only be one reason why the Majority Party chose to extend it: the large amount of revenue that they can spend on their favorite pet programs. Extending the program indefinitely is nothing more than a massive tax hike on hardworking Californians to pay for the majority party's social engineering programs.

It is time to call this program what it is: a cash grab that allows the government to collect $2 billion per year from Californians, without having to give anything of value in return. AB 32 needs to be evaluated on an on-going basis to determine that we are reducing greenhouse gas emissions.

Unless every global economic player is committed to these regulations and taxes we are making California less competitive without any benefit to our citizens.  Tapping into the huge brain power of our state through Research and Development Credits seems a better way to attack the global warming issue.  That way, technological advances can be applied across the globe.

Furthermore, redirecting the $2 billion away from the unelected bureaucrats and returning it to businesses and workers will spurn greater economic activity that benefits all Californians.

Unless it is making a noticeable difference in global warming, we should find a way to reduce greenhouse gases without crippling our economy.  California's consumers and innovative businesses don't deserve to pay the price for this misguided program. 

Sacramento needs to acknowledge that global warming has to be tackled on a global stage, not within the confines of our borders.  We need to stop the $2 billion tax grab, we need to say “no” to further social engineering and we need to reinvest in public education and water and transportation that positively impacts our economy and quality of life.