Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Investing

New York and Vermont Seek to Impose a Retroactive Climate Tax

by June 11, 2024
June 11, 2024
New York and Vermont Seek to Impose a Retroactive Climate Tax

Travis Fisher

Energy producers will be subject to retroactive taxes in New York if the state assembly passes Senate Bill S2129A, known as the “Climate Change Superfund Act.” The superfund legislation seeks to impose a retroactive tax on energy companies that have emitted greenhouse gases (GHGs) and operated within the state over the last seventy years.

If passed, the new law will impose $75 billion in repayment fees for “historical polluters,” who lawmakers assert are primarily responsible for climate change damages within the state. The state will “assign liability to and require compensation from companies commensurate with their emissions” over the last “70 years or more.” The bill would establish a standard of strict liability, stating that “companies are required to pay into the fund because the use of their products caused the pollution. No finding of wrongdoing is required.”

New York is not alone in this effort. Superfunds built on retroactive taxes on GHG emissions are becoming increasingly popular. Vermont recently enacted similar legislation, S.259 (Act 122), titled the “Climate Superfund Act,” in which the state also retroactively taxes energy producers for historic emissions. Similar bills have also been introduced in Maryland and Massachusetts.

Climate superfund legislation seems to have one purpose: to raise revenue by taxing a politically unpopular industry. Under the New York law, fossil fuel‐​producing energy companies would be taxed billions of dollars retroactively for engaging in legal and necessary behavior. For example, the seventy‐​year retroactive tax would conceivably apply to any company—going back to 1954—that used fossil fuels to generate electricity or produced fuel for New York drivers.

The typical “economic efficiency” arguments for taxing an externality go out the window with the New York and Vermont approach, for at least two reasons. First, the goal of a blackboard or textbook approach to a carbon tax is to internalize the GHG externality. To apply such a tax accurately, the government would need to calculate the social cost of carbon (SCC).

Unfortunately, estimating the SCC is methodologically complex and open to wide ranges of estimates. As a result, the SCC is theoretically very useful but practically impossible to calculate with any reasonable degree of precision.

Second, the retroactive nature of these climate superfunds undermines the very incentives a textbook tax on externalities would promote. A carbon tax’s central feature is that it is intended to reduce externalities from current and future activity by changing incentives. However, by imposing retroactive taxes, the New York and Vermont legislation will not impact emitters’ future behavior in a way that mimics a textbook carbon tax or improves economic outcomes.

Arbitrary and retroactive taxes can, however, raise prices for consumers by increasing policy uncertainty, affecting firm profitability, and reducing investment (or causing investors to flee GHG‐​emitting industries in the state altogether). Residents in both New York and Vermont already pay over 30 percent more than the US average in residential electricity prices, and this legislation will not lower these costs to consumers.

Climate superfunds are not a serious attempt to solve environmental challenges but rather a way to raise government revenue while unfairly punishing an entire industry (one whose actions the New York legislation claims “have been unconscionable, closely reflecting the strategy of denial, deflection, and delay used by the tobacco industry”).

Fossil fuel companies enabled GHG emissions, of course, but they also empowered significant growth, mobility, and prosperity. The punitive nature of the policy is laid bare by the fact that neither New York nor Vermont used a generic SCC or an evidentiary proceeding to calculate precise damages.

Finally, establishing a standard in which “no finding of wrongdoing is required” to levy fines against historical actions that were (and still are) legally permitted sets a dangerous precedent for what governments can do, not only to businesses that have produced fossil fuels but also to individuals who have consumed them.

Cato research associate Joshua Loucks contributed to this post.

0
FacebookTwitterGoogle +Pinterest
previous post
Healthy Profits: How To Get The Most From MedTech Investment
next post
House Bill Calls for an End to Government Funding of Censorship

You may also like

A Backlash Against First Amendment Standing?

September 11, 2023

The TikTok Case Heads to the Supreme Court

December 18, 2024

Nearly a Century Later, We Are Still Fighting...

December 5, 2024

Will Nicolás Maduro Invade Guyana?

December 5, 2023

Senate Immigration Deal Is a Mixed Bag

February 6, 2024

Introducing the CBDC Tracker, a Project of the...

November 14, 2023

State Tax Cuts: Cheers and Jeers

August 23, 2024

Two Scholars Revisit Trump’s Election Fraud Claims

February 2, 2024

The Promising Results of Accessory Dwelling Unit Reform

June 28, 2023

Should Governments Encourage Population Growth?

August 19, 2024

A Backlash Against First Amendment Standing?

September 11, 2023

The TikTok Case Heads to the Supreme Court

December 18, 2024

Nearly a Century Later, We Are Still Fighting...

December 5, 2024

Will Nicolás Maduro Invade Guyana?

December 5, 2023

Senate Immigration Deal Is a Mixed Bag

February 6, 2024

Introducing the CBDC Tracker, a Project of the...

November 14, 2023

State Tax Cuts: Cheers and Jeers

August 23, 2024

Two Scholars Revisit Trump’s Election Fraud Claims

February 2, 2024

The Promising Results of Accessory Dwelling Unit Reform

June 28, 2023

Should Governments Encourage Population Growth?

August 19, 2024

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • HMRC scammers stole £47m in phishing fraud targeting 100,000 taxpayer accounts

      June 5, 2025
    • Trump orders Attorney General to investigate Biden’s autopen use amid cognitive decline concerns

      June 5, 2025
    • Elon Musk warpath against Trump’s ‘big, beautiful bill’ rattles House GOP

      June 4, 2025
    • Durbin obstruction threat chills Senate as Trump nominees hang in balance

      June 4, 2025
    • Elon Musk posts ‘Kill Bill’ meme in latest push to nix Trump’s ‘big, beautiful bill’

      June 4, 2025
    • Why ADX Can Mislead You — And How to Avoid It

      June 4, 2025

    Categories

    • Business (8,144)
    • Investing (2,006)
    • Politics (15,519)
    • Stocks (3,127)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved