H.R. 5307 — Introduced in House

I 113th CONGRESS 2d Session H. R. 5307 IN THE HOUSE OF REPRESENTATIVES July 31, 2014 Mr. Larson of Connecticut introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Foreign Affairs, 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 A BILL To amend the Internal Revenue Code of 1986 to reduce carbon pollution in the United States, invest in the Nation’s infrastructure, and cut taxes for working Americans. 1. Short title This Act may be cited as the America’s Energy Security Trust Fund Act of 2014. 2. Tax on carbon dioxide content of certain substances (a) In general Chapter 38 of the Internal Revenue Code of 1986 (relating to environmental taxes) is amended by adding at the end thereof the following new subchapter: E Tax on carbon dioxide content of certain substances Sec. 4691. Imposition of tax. Sec. 4692. Refunds or credits. Sec. 4693. Border adjustments. Sec. 4694. Definitions and special rules. 4691. Imposition of tax (a) In general There is hereby imposed a tax on any taxable carbon substance sold by the manufacturer, producer, or importer thereof. (b) Amount of tax (1) In general The amount of tax imposed by subsection (a) on any taxable carbon substance shall be the applicable amount per ton of carbon dioxide content of such substance, as determined by the Secretary in consultation with the Secretary of Energy. (2) Fractional part of ton In the case of a fraction of a ton, the tax imposed by subsection (a) shall be the same fraction of the amount of such tax imposed on a whole ton. (3) Applicable amount For purposes of paragraph (1)— (A) Calendar year 2016 The applicable amount for calender year 2016 is $10. (B) Years after 2016 For a calendar year after 2016, the applicable amount is the sum of— (i) the amount in effect under this paragraph for the preceding calendar year, plus (ii) $10. (c) Substance taxed only once No tax shall be imposed by subsection (a) with respect to a taxable carbon substance if the person who would be liable for such tax establishes that a prior tax imposed by such section has been imposed with respect to such product. (d) Exemption for exports (1) Tax-free sales (A) In general No tax shall be imposed under subsection (a) on the sale by the manufacturer or producer of any taxable carbon substance for export or for resale by the purchaser to a second purchaser for export. (B) Proof of export required Rules similar to the rules of section 4221(b) shall apply for purposes of subparagraph (A). (2) Credit or refund where tax paid (A) In general Except as provided in subparagraph (B), if— (i) tax under subsection (a) was paid with respect to any taxable carbon substance, and (ii) (I) such substance was exported by any person, or (II) such substance was used as a material in the manufacture or production of a taxable carbon substance which was exported by any person and which, at the time of export, was a taxable carbon substance, credit or refund (without interest) of such tax shall be allowed or made to the person who paid such tax. (B) Condition to allowance No credit or refund shall be allowed or made under subparagraph (A) unless the person who paid the tax establishes that he— (i) has repaid or agreed to repay the amount of the tax to the person who exported the taxable carbon substance, or (ii) has obtained the written consent of such exporter to the allowance of the credit or the making of the refund. (C) Refunds directly to exporter The Secretary shall provide, in regulations, the circumstances under which a credit or refund (without interest) of the tax under subsection (a) shall be allowed or made to the person who exported the taxable carbon substance, where— (i) the person who paid the tax waives his claim to the amount of such credit or refund, and (ii) the person exporting the taxable carbon substance provides such information as the Secretary may require in such regulations. 4692. Refunds or credits (a) Sequestered carbon Under regulations prescribed by the Secretary, if— (1) a person uses a taxable carbon substance as a feedstock so that the carbon associated with such substance will not be emitted, or (2) a person captures and sequesters the carbon in a taxable carbon substance, then an amount equal to the amount of tax in effect under section 4691(b) with respect to such substance for the calendar year in which such use begins shall be allowed as a credit or refund (without interest) to such person in the same manner as if it were an overpayment of tax imposed by section 4691. (b) Previously taxed carbon substances used To make another taxable carbon substance Under regulations prescribed by the Secretary, if— (1) a tax under section 4691 was paid with respect to any taxable carbon substance, and (2) such substance was used by any person in the manufacture or production of any other substance which is a taxable carbon substance, then an amount equal to the tax so paid shall be allowed as a credit or refund (without interest) to such person in the same manner as if it were an overpayment of tax imposed by subsection (a). In any case to which this paragraph applies, the amount of any such credit or refund shall not exceed the amount of tax imposed by subsection (a) on the other taxable fuel manufactured or produced (or which would have been imposed by such subsection on such other fuel but for subsection (c)). 4693. Border adjustments (a) Imports The Secretary shall impose a carbon equivalency fee on imports of carbon-intensive goods that shall be equivalent to the cost that domestic producers of comparable carbon-intensive goods incur as a result of— (1) taxes paid by manufacturers, producers, and importers of taxable carbon substances under this section, and (2) carbon equivalency fees paid by importers of carbon intensive goods used in the production of the comparable carbon intensive goods in question. (b) Exports Notwithstanding the limitations of section 4692, the Secretary shall allow as a credit or refund (without interest) to the exporter of a carbon-intensive good produced in the United States in the same manner as if it were an overpayment of tax imposed by section 4691 an amount equivalent to the cost that domestic producers of such carbon intensive goods incur as a result of— (1) taxes paid by manufacturers, producers, and importers of taxable carbon substances under this section, and (2) carbon equivalency fees paid by importers of carbon intensive goods used in the production of the comparable carbon intensive goods in question. (c) Expiration This section shall cease to have effect at such time as and to the extent that— (1) (A) an international agreement requiring countries that emit greenhouse gases and produce carbon intensive goods for international markets to adopt equivalent measures comes into effect, or (B) the country of export has implemented equivalent measures, and (2) the actions provided for by subsections (a) and (b) are no longer appropriate. 4694. Definitions and special rules (a) Definitions For purposes of this subchapter— (1) Taxable carbon substance The term taxable carbon substance means— (A) coal (including lignite and peat), (B) petroleum and any petroleum product (as defined in section 4612(a)(3)), and (C) natural gas, which is extracted, manufactured, or produced in the United States or entered into the United States for consumption, use, or warehousing. (2) United States The term United States has the meaning given such term by section 4612(a)(4). (3) Importer The term importer means the person entering the taxable carbon substance for consumption, use, or warehousing. (4) Ton The term ton means metric tons. In the case of any taxable carbon substance which is a gas, the term ton means the amount of such gas in cubic feet which is the equivalent of a metric ton on a molecular weight basis. (5) Carbon-intensive good The term carbon-intensive good means a good that (as identified by the Secretary by rule)— (A) is a primary product, or (B) is a manufactured item in which one or more primary products are inputs and the cost of production of which in the United States is significantly increased by this subchapter. (6) Primary product The term primary product means— (A) iron, steel, steel mill products (including pipe and tube), aluminum, cement, glass (including flat, container, and specialty glass and fiberglass), pulp, paper, chemicals, or industrial ceramics, and (B) any other manufactured product that the Secretary determines— (i) is sold for purposes of further manufacture, and (ii) generates, in the course of the manufacture of the product, direct and indirect greenhouse gas emissions that are comparable (on an emissions-per-dollar of output basis) to emissions generated in the manufacture or production of primary products identified in subparagraph (A). (7) Equivalent measure The term equivalent measure means a tax or other regulatory requirement that imposes a cost on manufacturers of carbon intensive goods located outside the United States approximately equal to the cost imposed by section 4691 on manufacturers of comparable carbon intensive goods located in the United States. (b) Use treated as sale If any person manufactures, produces, or imports any taxable carbon substance and uses such substance, then such person shall be liable for tax under section 4691 in the same manner as if such substance were sold by such person. (c) Special rules for inventory exchanges (1) In general Except as provided in this paragraph, in any case in which a manufacturer, producer, or importer of a taxable carbon substance exchanges such substance as part of an inventory exchange with another person— (A) such exchange shall not be treated as a sale, and (B) such other person shall, for purposes of section 4691, be treated as the manufacturer, producer, or importer of such substance. (2) Registration requirement Paragraph (1) shall not apply to any inventory exchange unless— (A) both parties are registered with the Secretary as manufacturers, producers, or importers of taxable carbon substances, and (B) the person receiving the taxable carbon substance has, at such time as the Secretary may prescribe, notified the manufacturer, producer, or importer of such person’s registration number and the internal revenue district in which such person is registered. (3) Inventory exchange For purposes of this subsection, the term inventory exchange means any exchange in which 2 persons exchange property which is, in the hands of each person, property described in section 1221(a)(1). (d) Regulations The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subchapter. . (b) Establishment of America’s Energy Security Trust Fund Subchapter A of chapter 98 of such Code (relating to trust fund code) is amended by adding at the end the following: 9512. America’s Energy Security Trust Fund (a) Creation of Trust Fund There is established in the Treasury of the United States a trust fund to be known as America’s Energy Security 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 increase in revenues received in the Treasury as the result of the tax imposed under section 4691. (c) Distribution of amounts in Trust Fund Amounts in the Trust Fund equivalent to the taxes received in the Treasury under section 4691 for a calendar year shall be available without further appropriation, as follows: (1) First, the affected industry transition assistance amount shall be available for transition assistance to workers in industries negatively affected by the America’s Energy Security Trust Fund Act of 2014, as determined by the Secretary of the Treasury in consultation with the Secretary of Labor. (2) Second, of the amount remaining after the application of paragraph (1), the Highway Trust Fund shortfall amount shall be available to be transferred to the Highway Trust Fund. For purposes of this paragraph, the term Highway Trust Fund shortfall amount means the amount determined by the Secretary to be equal to the excess of— (A) the sum of the obligations of the United States specified in section 9503(c)(1) plus the amounts to be expended under section 9503(e)(3), over (B) the amounts available in the Highway Trust Fund to meet those obligations and expenditures (determined without regard to this paragraph or section 9503(f)(5)). (3) Third, the amount remaining after the application of paragraph (1) shall be available for payroll tax relief under the rebate paid under section 36C. (d) Affected industry transition assistance amount For purposes of subsection (c)(1), the affected industry transition assistance amount is the amount determined as follows: (1) For calendar year 2016, 1/10 of the amount in the Trust Fund equivalent to the taxes received in the Treasury under section 4691 for calendar year 2016. (2) For calendar year 2017, 9/10 of the amount made available under paragraph (1) for calendar year 2016. (3) For calendar year 2018, 4/5 of the amount made available under paragraph (1) for calendar year 2016. (4) For calendar year 2019, 7/10 of the amount made available under paragraph (1) for calendar year 2016. (5) For calendar year 2020, 3/5 of the amount made available under paragraph (1) for calendar year 2016. (6) For calendar year 2021, ½ of the amount made available under paragraph (1) for calendar year 2016. (7) For calendar year 2022, 2/5 of the amount made available under paragraph (1) for calendar year 2016. (8) For calendar year 2023, 3/10 of the amount made available under paragraph (1) for calendar year 2016. (9) For calendar year 2024, 1/5 of the amount made available under paragraph (1) for calendar year 2016. (10) For calendar year 2025, 1/10 of the amount made available under paragraph (1) for calendar year 2016. (11) For calendar years after 2025, zero. . (c) Transfers to Highway Trust Fund Subsection (f) of section 9503 of the Internal Revenue Code of 1986 is amended by redesignating paragraph (5) as paragraph (7) and by inserting after paragraph (4) the following new paragraph: (5) Additional increase in fund balance There is hereby transferred to the Highway Trust Fund amounts appropriated each year from America’s Energy Security Trust Fund under section 9512(c)(2). Such amounts shall be apportioned to the Highway Account and the Mass Transit Account in accordance with subsection (e)(5). . (d) Clerical amendments (1) The table of subchapters for chapter 38 of such Code is amended by adding at the end thereof the following new item: Subchapter E. Tax on carbon dioxide content of certain substances . (2) The table of sections for subchapter A of chapter 98 of such Code is amended by adding at the end the following: Sec. 9512. America’s Energy Security Trust Fund. . (e) Effective date The amendments made by this section shall take effect on the date of the enactment of this Act. 3. Carbon tax rebate of payroll tax (a) In general Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to refundable credits) is amended by inserting after section 36B the following new section: 36C. Carbon tax rebate of payroll tax (a) In general In the case of an individual, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the carbon tax rebate. (b) Carbon tax rebate (1) In general For purposes of this section, the term carbon tax rebate means with respect to a taxable year the individual’s share of the amount determined by the Secretary on a per capita basis to be the amount available under section 9512(c)(3) for the calendar year in which or with which the taxable year begins. (2) Determination based on estimates The determination under paragraph (1) shall be made on the basis of estimates by the Secretary, and proper adjustments shall be made in amounts available under section 9512(c)(3) for the succeeding taxable year to the extent prior estimates were in excess of or less than the amounts actually available under such section for the prior taxable year. (c) Limitation based on payroll taxes paid and Social Security benefits (1) In general The amount allowed as a credit under subsection (a) with respect to any individual for a taxable year shall not exceed the greater of— (A) the total amount of taxes paid with respect to such individual for such taxable year under section 1401 and chapters 21 and 22, determined after taking into account any refund under section 31(b) and 6413(c), or (B) 10 percent of the aggregate amount of social security benefits (within the meaning of section 86(d)) received by such individual for the taxable year. (2) Special rule for Social Security benefits received for less than 12 months For purposes of paragraph (1)(B), if Social Security benefits (as so defined) were not received for each month in the taxable year, such benefits shall be annualized by multiplying the Social Security benefits received by 12 and dividing the result by the number of months in such taxable year for which such benefits were received. (d) Denial of credit to dependents No credit shall be allowed under subsection (a) to an individual for such individual’s taxable year if a deduction under section 151 with respect to such individual is allowed to another taxpayer for a taxable year beginning in the calendar year in which such individual’s taxable year begins. . (b) Conforming amendments (1) Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting 36C, after 36B,. (2) The table of sections for subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 36C the following new item: Sec. 36C. Carbon tax rebate of payroll tax. . (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2015. 4. Study of taxation of non-carbon greenhouse gases (a) In general The Secretary of the Treasury, in consultation with the Secretary of Energy shall conduct a study of the best methods to assess and collect tax on non-carbon greenhouse gases similar to the tax imposed by section 4691 of the Internal Revenue Code of 1986 (as added by this Act). (b) Report Not later than 6 months after the date of the enactment of this Act, the Secretary of the Treasury shall submit to the Congress the findings of the report required under subsection (a) together with such legislative recommendations as the Secretary determine appropriate for the assessment and collection of such tax. 5. Sense of Congress It is the sense of Congress that the United States should work proactively under the United Nations Framework Convention on Climate Change and in other appropriate fora to establish binding agreements committing all major greenhouse gas emitting nations and countries with globally competitive producers of carbon intensive goods to contribute equitably to the reduction of global greenhouse gas emissions.