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To amend the Internal Revenue Code of 1986 to impose a tax on fossil fuels and to use the revenues for economic benefit.
Mr. McNerney introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on Education and the Workforce, Energy and Commerce, Science, Space, and Technology, and Transportation and Infrastructure, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned
To amend the Internal Revenue Code of 1986 to impose a tax on fossil fuels and to use the revenues for economic benefit.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
This Act may be cited as the “Consumers Rebate to ban Emissions and Boost AlTernative Energy Act” or the “Consumers REBATE Act”.
(a) In general.—The Internal Revenue Code of 1986 is amended by adding at the end the following:
“(a) In general.—There is hereby imposed a tax on producing at the wellhead or mine in the United States, or importing, a taxable carbon substance.
“(1) IN GENERAL.—The tax imposed under subsection (a) shall be the applicable amount per ton of carbon dioxide content of the life-cycle emissions from the taxable carbon substance.
“(A) IN GENERAL.—For calendar year 2020, the term ‘applicable amount’ means $25.
“(B) ANNUAL ADJUSTMENTS GENERALLY.—In the case of any taxable year beginning in a calendar year after 2020, the dollar amount in effect under subparagraph (A) for the preceding calendar shall be increased by $10.
“(A) IN GENERAL.—If the Administrator determines and specifies in a report issued under subsection (c)(3)(A) in the year immediately preceding a year specified in subsection (c)(1)(A) that the emissions reduction benchmark for that specified year will be met or exceeded, then for that specified year and the succeeding 4 calendar years—
“(i) paragraph (2) shall not apply, and
“(ii) the applicable amount shall be zero.
“(i) IN GENERAL.—Except as provided in clause (ii), for any calendar year after a period referred to in subparagraph (A) paragraph (2) shall be applied and the applicable amount for the first such calendar year shall be the dollar amount in effect for the calendar year preceding the beginning of such period.
“(ii) EXCEPTION.—Clause (i) shall not apply to a calendar year if, respect to that calendar year, a determination described in subparagraph (A) applies to that calendar year.
“(A) 30 percent below the emissions benchmark by 2025.
“(B) 40 percent below the emissions benchmark by 2030.
“(C) 50 percent below the emissions benchmark by 2035.
“(D) 70 percent below the emissions benchmark by 2045.
“(E) 80 percent below the emissions benchmark by 2050.
“(2) EMISSIONS BENCHMARK.—The emissions benchmark is the 2005 level of life-cycle emissions from the taxable carbon substances, as determined by the Administrator.
“(A) EMISSIONS REDUCTIONS TARGET REPORT.—Not later than 2 years after the date of enactment of the Consumers Rebate to ban Emissions and Boost AlTernative Energy Act, and every 2 years thereafter, the Administrator shall issue an emissions reduction benchmarks report. The report shall include, in detail, the emission reductions resulting from the imposition of tax under this section and the expected trajectory of emissions reductions.
“(B) 5-YEAR REPORT.—The Administrator shall, after consultation with other appropriate Federal and State agencies and non-Federal stakeholders, issue a report every 5 years on the effects of the carbon tax established under this subtitle, including energy market conditions, impacts to consumers, impacts to the environment, actual emission reductions, and reliability and resiliency of the electric grid.
“(d) By whom paid.—The tax imposed by subsection (a) shall be paid by the producer, miner, or importer of the taxable carbon substance.
“(e) Regulations.—Not later than 2 years after the date of enactment of the Consumers Rebate to ban Emissions and Boost AlTernative Energy Act, the Secretary shall issue such regulations as may be necessary or appropriate to carry out this subtitle, including regulations relating to the timely and efficient issuance of permits and collection of payments for such permits.
“(a) Purpose.—The purpose of this section is to ensure the environmental effectiveness of this subtitle.
“(b) Imports.—The Secretary, in consultation with the Secretary of Energy, the Administrator, and the Commissioner of the U.S. Customs and Border Protection, shall impose carbon equivalency fees on imports of goods containing or produced using a taxable carbon substance. The amount of the carbon equivalency fee with respect to the import of any good shall be equal to the cost that domestic producers of a comparable good incur as a result of—
“(1) the tax imposed under section 9901, and
“(2) carbon equivalency fees imposed under this section on any goods used in the production of such good.
“(c) Collection.—The fees imposed under this section shall be collected by the Commissioner of the U.S. Customs and Border Protection.
“(1) an international agreement requiring countries that emit carbon dioxide or produce goods containing or using taxable carbon substances to adopt equivalent measures comes into effect, or
“(2) the country of export has implemented equivalent measures, as determined by the Secretary, in consultation with the Secretary of State.
“For purposes of this subtitle—
“(B) oil, and
“(C) natural gas.
“(2) COAL.—The term ‘coal’ includes lignite, anthracite, bituminous, subbituminous, peat or other forms of what is commonly referred to as coal produced from a mine.
“(3) OIL.—The term ‘oil’ includes crude oil condensates, natural gasoline, shale oil, any bitumen or bituminous mixture, any oil derived from a bitumen or bituminous mixture, and any oil derived from kerogen-bearing sources.
“(4) NATURAL GAS.—The term ‘natural gas’ means either natural gas unmixed, or any mixture of natural and artificial gas.
“(5) LIFE-CYCLE EMISSIONS.—The term ‘life-cycle emissions’ means total life-cycle emissions of carbon dioxide from a taxable carbon substance which shall be determined by the Administrator.
“(6) ADMINISTRATOR.—The term ‘Administrator’ means the Administrator of the Environmental Protection Agency.
“(7) UNITED STATES.—The term ‘United States’ means the States, and territory or possession of the United States, and the District of Columbia.
“(1) IN GENERAL.—No tax shall be imposed under section 9901 on the production or mining of a taxable carbon substance which is intended for export, including the sale or resale by a purchaser to a second purchaser for export.
“(2) PROOF OF EXPORT REQUIRED.—Rules similar to the rules of section 4221(b) shall apply for purposes of paragraph (1).
“(i) tax under section 9901 was paid with respect to any taxable carbon substance, and
“(II) such substance was used as a material in the manufacture or production of a substance which was exported by any person and which, at the time of export, was a taxable carbon substance (as defined in section 9902(1)),
credit or refund (without interest) of such tax shall be allowed or made to the person who paid such tax.
“(i) has repaid or agreed to repay the amount of the tax to the person who exported the taxable chemical or taxable substance (as so defined), or
“(ii) has obtained the written consent of such exporter to the allowance of the credit or the making of the refund.
“(4) REFUNDS DIRECTLY TO EXPORTER.—The Secretary shall provide, in regulations, the circumstances under which a credit or refund (without interest) of the tax under section 9901 shall be allowed or made to the person who exported the taxable carbon substance, where—
“(A) the person who paid the tax waives his claim to the amount of such credit or refund, and
“(B) the person exporting the taxable carbon substance provides such information as the Secretary may require in such regulations.
“(5) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subsection.”.
(1) IN GENERAL.—Subchapter A of chapter 98 of such Code (relating to trust fund code) is amended by adding at the end the following:
“(a) Creation of trust fund.—There is established in the Treasury of the United States a trust fund to be known as the ‘Carbon Trust Fund’ (referred to in this section as the ‘Trust Fund’), consisting of such amounts as may be appropriated or credited to the Trust Fund as provided in this section or section 9602(b).
“(b) Transfers to trust fund.—There is hereby appropriated to the Trust Fund an amount equivalent to the amounts received in the Treasury pursuant to section 9901.
“(A) The amount necessary shall be paid into general receipts in the Treasury to offset a reduction in the rate of individual income tax by reason of the amendments made by section 2(c) of the Consumers Rebate to ban Emissions and Boost AlTernative Energy Act.
“(i) Worker transition assistance, with an emphasis on coal workers and coal communities, and workforce development.
“(ii) Rural energy assistance and efficiency improvements.
“(iii) Technology neutral, energy-related research and development.
“(iv) Air, rail, and marine transportation emissions reduction and efficiency programs.
“(v) Electric grid and pipeline innovations and improvements.
“(vi) Increasing resiliency of water, transportation, energy, and other infrastructure that are vulnerable to extreme weather and other effects of a changing climate.
“(vii) Energy efficiency and conservation.
“(C) The amounts remaining after the application of subparagraphs (A) and (B) shall be made available for quarterly citizen rebates.
“(2) CONSULTATION.—In determining the amount provided toward each category referred to in paragraph (1)(B), the Secretary shall consult with the Secretary of Energy, the Secretary of Labor, and any other relevant Federal agency prior to distributing money from the Trust Fund.”.
(2) CLERICAL AMENDMENT.—The table of sections for subchapter A of chapter 98 of such Code is amended by adding at the end the following new item:
(1) IN GENERAL.—Section 1(j) of such Code is amended by redesignating paragraph (6) as paragraph (7) and by inserting after paragraph (5) the following:
“(A) by substituting ‘9%’ for ‘10%’ each place it appears,
“(B) by substituting ‘11%’ for ‘12%’ each place it appears,
“(C) by substituting ‘21%’ for ‘22%’ each place it appears, and
“(D) by substituting ‘23.5%’ for ‘24%’ each place it appears.”.
(2) COORDINATION AMONG PROVISIONS RELATING TO CHILDREN WITH UNEARNED INCOME.—Clauses (i)(II) and (III) of section 1(j)(4)(B) of such Code are amended by striking “paragraph (3)” and inserting “paragraphs (3) and (6)”.
(A) IN GENERAL.—From amounts made available pursuant to section 9512(c)(1)(C) of the Internal Revenue Code of 1986, the Secretary shall make payment each calendar quarter to each eligible dividend recipient.
(I) the total amount available under section 9512(c)(1)(C) of the Internal Revenue Code of 1986 for the preceding calendar quarter, by
(II) the total number of eligible dividend recipients for such preceding calendar quarter, and
(aa) the quarterly average of the total amount available under section 9512(c)(1)(C) of the Internal Revenue Code of 1986 for the four quarters of 2028, and
(bb) the total amount available under section 9512(c)(1)(C) of the Internal Revenue Code of 1986 for the preceding calendar quarter, by
(II) the total number of eligible dividend recipients for such preceding calendar quarter.
(C) ELIGIBLE DIVIDEND RECIPIENT.—For purposes of this subsection, the term “eligible dividend recipient” means, with respect to any quarter, any individual with a valid social security number (other than a nonresident undocumented individual) who is lawfully present in the United States for such quarter, as determined and verified by the Secretary in consultation with any other Federal entity the Secretary determines appropriate.
(D) FUND.—The term “Fund” means the Carbon Trust Fund established by section 9512 of the Internal Revenue Code of 1986 (as added by subsection (e)).
(A) procedures for the identification and maintenance of an accurate list of eligible dividend recipients, and
(B) the use of electronic means for transfers of funds, to the maximum extent practicable.
(e) Clerical amendment.—The table of subtitles for the Internal Revenue Code of 1986 is amended by adding at the end the following new item:
(1) Except as provided by paragraph (2), the amendments made by this section shall take effect on January 1, 2020.
(2) The amendments made by subsection (c) shall apply to taxable years beginning after December 31, 2019.