I 

112TH CONGRESS 

1ST SESSION H. R. 3242 

To amend the Internal Revenue Code of 1986 to reduce emissions of carbon 

dioxide by imposing a tax on primary fossil fuels based on their carbon 

content. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 24, 2011 

Mr. STARK (for himself, Mr. GRIJALVA, Mr. MORAN, Mr. FILNER, Mr. BLUMENAUER, Mr. HONDA, Mr. MCDERMOTT, Mr. HOLT, and Mr. HASTINGS

of Florida) introduced the following bill; which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to reduce 

emissions of carbon dioxide by imposing a tax on primary 

fossil fuels based on their carbon content. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Save Our Climate Act 

5 of 2011’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds as follows: 


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1 (1) The Intergovernmental Panel on Climate 

2 Change (IPCC) has concluded that human emissions 

3 of greenhouse gases, particularly carbon dioxide are 

4 responsible for global climate change. 

5 (2) The IPCC has estimated that global tem6 peratures will rise between 3.2–7.2 degrees Fahr7 enheit in the next 100 years if carbon dioxide emis8 sions are not dramatically reduced. 

9 (3) An increase of even a few degrees could 

10 have major adverse impacts on both the natural and 

11 man-made environments, due to rising sea-levels, in12 tensification of weather events, mass extinction of 

13 species, and scarcity of water. 

14 (4) The United States is responsible for nearly 

15 18 percent of the world’s annual carbon dioxide 

16 emissions, equaling approximately 5.5 billion metric 

17 tons of carbon dioxide per year. 

18 (5) In order to stabilize the earth’s climate and 

19 prevent catastrophic global climate change, the level 

20 of worldwide carbon dioxide emissions needs to be 

21 reduced 80 percent below 1990 levels by 2050. 

22 (6) A tax on the carbon content of fossil fuels 

23 will create incentives for investment and develop24 ment of low and zero carbon alternatives, thereby reVerDate Mar 15 2010 20:22 Oct 25, 2011 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3242.IH H3242

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1 ducing carbon dioxide emissions and while gener2 ating funds to reduce our deficits. 

3 (7) Revenue from a carbon tax can reduce the 

4 deficit. Dedicating the revenue from a $10 per ton 

5 of carbon dioxide tax could reduce the deficit by 

6 more than $480 billion over ten years. 

7 (8) In order to protect consumers from higher 

8 energy prices, all carbon tax revenue not targeted 

9 for deficit reduction shall be returned to individuals 

10 through a dividend distributed on an annual basis. 

11 SEC. 3. IMPOSITION OF CARBON TAX ON PRIMARY FOSSIL 

12 FUELS. 

13 (a) GENERAL RULE.—Chapter 38 of the Internal 

14 Revenue Code of 1986 (relating to environmental taxes) 

15 is amended by adding at the end thereof the following new 

16 subchapter: 

17 ‘‘Subchapter E—Carbon Tax on Primary 

18 Fossil Fuels 

‘‘Sec. 4691. Imposition of tax. 

19 ‘‘SEC. 4691. IMPOSITION OF TAX. 

20 ‘‘(a) GENERAL RULE.—There is hereby imposed a 

21 tax on any taxable fuel sold by the manufacturer, pro22 ducer, or importer thereof. 

23 ‘‘(b) AMOUNT OF TAX.— 


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1 ‘‘(1) IN GENERAL.—The amount of tax imposed 

2 by subsection (a) on any taxable fuel shall be an 

3 equivalent amount to $10 per ton of carbon dioxide 

4 produced by combustion in such fuel, as determined 

5 by the Secretary in consultation with the Secretary 

6 of Energy. 

7 ‘‘(2) ANNUAL INCREASE IN AMOUNT OF TAX.— 

8 For each calendar year beginning after 2011 which 

9 is not the year after a target attainment year, para10 graph (1) shall be applied by substituting for ‘$10’ 

11 the following: ‘the amount in effect under this para12 graph for the preceding calendar year, increased by 

13 $10’. 

14 ‘‘(3) RATE FREEZE AFTER TARGET ATTAIN15 MENT.—For each calendar year after a target at16 tainment year, the amount in effect under para17 graph (1) shall be the amount in effect under para18 graph (1) for the preceding calendar year. 

19 ‘‘(4) TARGET ATTAINMENT YEAR.—For pur20 poses of paragraph (2), a calendar year is a target 

21 attainment year if the level of carbon dioxide emis22 sions in the United States for the calendar year does 

23 not exceed 20 percent of the level of carbon dioxide 

24 emissions in the United States for calendar year 


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1 1990, as determined by the Energy Information Ad2 ministration, Department of Energy. 

3 ‘‘(c) TAXABLE FUEL.—For purposes of this section, 

4 the term ‘taxable fuel’ means— 

5 ‘‘(1) coal (including lignite and peat), 

6 ‘‘(2) petroleum and any petroleum product (as 

7 defined in section 4612(a)(3)), 

8 ‘‘(3) natural gas, and 

9 ‘‘(4) biomass, municipal solid waste, and any 

10 organic material other than coal, petroleum, and 

11 natural gas that is sold for the purpose of energy 

12 production, as determined by the Secretary of En13 ergy, 

14 which is extracted, manufactured, or produced in the 

15 United States or entered into the United States for con16 sumption, use, or warehousing. 

17 ‘‘(d) OTHER DEFINITIONS.—For purposes of this 

18 section— 

19 ‘‘(1) UNITED STATES.—The term ‘United 

20 States’ has the meaning given such term by section 

21 4612(a)(4). 

22 ‘‘(2) IMPORTER.—The term ‘importer’ means 

23 the person entering the taxable fuel for consumption, 

24 use, or warehousing. 


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1 ‘‘(3) TON.—The term ‘ton’ means 2,000 

2 pounds. In the case of any taxable fuel which is a 

3 gas, the term ‘ton’ means the amount of such gas 

4 in cubic feet which is the equivalent of 2,000 pounds 

5 on a molecular weight basis. 

6 ‘‘(e) EXCEPTION.—No tax shall be imposed by sub7 section (a) on the sale or in-kind exchange of any taxable 

8 fuel for deposit in the Strategic Petroleum Reserve estab9 lished under part B of title I of the Energy Policy and 

10 Conservation Act. 

11 ‘‘(f) SPECIAL RULES.— 

12 ‘‘(1) ONLY 1 TAX IMPOSED WITH RESPECT TO

13 ANY PRODUCT.—No tax shall be imposed by sub14 section (a) with respect to a taxable fuel if, with re15 spect to such fuel, the person who would be liable 

16 for such tax establishes that a prior tax imposed by 

17 such subsection has been imposed and no refund or 

18 credit with respect to such tax is allowed under sub19 section (g). 

20 ‘‘(2) FRACTIONAL PART OF TON.—In the case 

21 of a fraction of a ton, the tax imposed by subsection 

22 (a) shall be the same fraction of the amount of such 

23 tax imposed on a whole ton. 

24 ‘‘(3) USE AND CERTAIN EXCHANGES BY MANU25 FACTURER, ETC.— 


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1 ‘‘(A) USE TREATED AS SALE.—If any per2 son manufactures, produces, or imports any 

3 taxable fuel and uses such fuel, then such per4 son shall be liable for tax under subsection (a) 

5 in the same manner as if such fuel were sold 

6 by such person. 

7 ‘‘(B) SPECIAL RULES FOR INVENTORY EX8 CHANGES.— 

9 ‘‘(i) IN GENERAL.—Except as pro10 vided in this subparagraph, in any case in 

11 which a manufacturer, producer, or im12 porter of a taxable fuel exchanges such 

13 fuel as part of an inventory exchange with 

14 another person— 

15 ‘‘(I) such exchange shall not be 

16 treated as a sale, and 

17 ‘‘(II) such other person shall, for 

18 purposes of subsection (a), be treated 

19 as the manufacturer, producer, or im20 porter of such fuel. 

21 ‘‘(ii) REGISTRATION REQUIREMENT.— 

22 Clause (i) shall not apply to any inventory 

23 exchange unless— 

24 ‘‘(I) both parties are registered 

25 with the Secretary as manufacturers, 


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1 producers, or importers of taxable 

2 fuels, and 

3 ‘‘(II) the person receiving the 

4 taxable fuel has, at such time as the 

5 Secretary may prescribe, notified the 

6 manufacturer, producer, or importer 

7 of such person’s registration number 

8 and the internal revenue district in 

9 which such person is registered. 

10 ‘‘(iii) INVENTORY EXCHANGE.—For 

11 purposes of this subparagraph, the term 

12 ‘inventory exchange’ means any exchange 

13 in which 2 persons exchange property 

14 which is, in the hands of each person, 

15 property described in section 1221(a)(1). 

16 ‘‘(g) REFUND OR CREDIT FOR CERTAIN USES.— 

17 ‘‘(1) MANUFACTURE OR PRODUCTION OF AN18 OTHER TAXABLE FUEL.—Under regulations pre19 scribed by the Secretary, if— 

20 ‘‘(A) a tax under subsection (a) was paid 

21 with respect to any taxable fuel, and 

22 ‘‘(B) such fuel was used by any person in 

23 the manufacture or production of any other 

24 substance which is a taxable fuel, 


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1 then a credit or refund (without interest) shall be al2 lowed, in the same manner as if it were an overpay3 ment of tax imposed by subsection (a), to such per4 son in an amount equal to the tax so paid. 

5 ‘‘(2) EMBEDDED OR SEQUESTERED CARBON.— 

6 Under regulations prescribed by the Secretary, if— 

7 ‘‘(A) a tax under subsection (a) was paid 

8 with respect to any taxable fuel, 

9 ‘‘(B) a person uses such fuel in the manu10 facture or production of any substance which is 

11 not a taxable fuel, and 

12 ‘‘(C) in the process of such manufacture or 

13 production, carbon in such fuel is embedded or 

14 sequestered, 

15 then a credit or refund (without interest) shall be al16 lowed to such person in the same manner as if it 

17 were an overpayment of tax imposed by subsection 

18 (a). The amount of such credit or refund shall be an 

19 amount equal to the amount of tax in effect under 

20 subsection (a) with respect to such fuel for the cal21 endar year in which such manufacture or production 

22 occurred, determined on the basis of carbon so em23 bedded or sequestered. 

24 ‘‘(3) LIMITATION.—In any case to which para25 graph (1) or (2) applies, the amount of any such 


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1 credit or refund shall not exceed the amount of tax 

2 imposed by subsection (a) on the taxable fuel used 

3 in such manufacture or production (or which would 

4 have been imposed by such subsection on such other 

5 fuel but for subsection (h)). 

6 ‘‘(h) EXEMPTION FOR EXPORTS OF TAXABLE

7 FUELS.— 

8 ‘‘(1) TAX-FREE SALES.— 

9 ‘‘(A) IN GENERAL.—No tax shall be im10 posed by subsection (a) on the sale by the man11 ufacturer or producer of any taxable fuel for ex12 port or for resale by the purchaser to a second 

13 purchaser for export. 

14 ‘‘(B) PROOF OF EXPORT REQUIRED.— 

15 Rules similar to the rules of section 4221(b) 

16 shall apply for purposes of subparagraph (A). 

17 ‘‘(2) CREDIT OR REFUND WHERE TAX PAID.— 

18 ‘‘(A) IN GENERAL.—Except as provided in 

19 subparagraph (B), if— 

20 ‘‘(i) tax under subsection (a) was paid 

21 with respect to any taxable fuel, and 

22 ‘‘(ii)(I) such fuel was exported by any 

23 person, or 

24 ‘‘(II) such fuel was used as a material 

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1 able fuel which was exported by any person 

2 and which, at the time of export, was a 

3 taxable fuel, 

4 credit or refund (without interest) of such tax 

5 shall be allowed or made to the person who paid 

6 such tax. 

7 ‘‘(B) CONDITION TO ALLOWANCE.—No 

8 credit or refund shall be allowed or made under 

9 subparagraph (A) unless the person who paid 

10 the tax establishes that he— 

11 ‘‘(i) has repaid or agreed to repay the 

12 amount of the tax to the person who ex13 ported the taxable fuel, or 

14 ‘‘(ii) has obtained the written consent 

15 of such exporter to the allowance of the 

16 credit or the making of the refund. 

17 ‘‘(C) REFUNDS DIRECTLY TO EX18 PORTER.—The Secretary shall provide, in regu19 lations, the circumstances under which a credit 

20 or refund (without interest) of the tax under 

21 subsection (a) shall be allowed or made to the 

22 person who exported the taxable fuel, where— 

23 ‘‘(i) the person who paid the tax 

24 waives his claim to the amount of such 

25 credit or refund, and 


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1 ‘‘(ii) the person exporting the taxable 

2 fuel provides such information as the Sec3 retary may require in such regulations. 

4 ‘‘(3) REGULATIONS.—The Secretary shall pre5 scribe such regulations as may be necessary to carry 

6 out the purposes of this subsection. 

7 ‘‘(i) BORDER ADJUSTMENTS.— 

8 ‘‘(1) IN GENERAL.—The Secretary shall make 

9 harmonization adjustments on the importation of 

10 any product. 

11 ‘‘(2) FEE.—In the case that taxes paid by man12 ufacturers and producers under this section with re13 spect to comparable products exceeds the sum of any 

14 similar carbon content tax imposed by a foreign 

15 country on the imported product, plus the amount 

16 imposed under subsection (a), the adjustment under 

17 subsection (a) shall be the imposition of a fee in the 

18 amount the Secretary determines is equal to such 

19 excess. Such fee shall be treated as a tax for pur20 poses of subtitle F. 

21 ‘‘(3) CREDIT OR REFUND.—In the case that 

22 any similar carbon content tax imposed by a foreign 

23 country on the imported product exceeds the taxes 

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1 ment under subsection (a) shall be a credit or refund 

2 (without interest) in the amount the Secretary deter3 mines is equal to such excess. Such credit or refund 

4 shall be allowed in the same manner as if it were an 

5 overpayment of tax. 

6 ‘‘(4) REGULATIONS.—The Secretary shall issue 

7 such regulations as may be necessary to carry out 

8 this subsection.’’. 

9 (b) STUDY.—Not later than 5 years after the date 

10 of the enactment of this Act, and every 5 years thereafter, 

11 the Secretary of the Treasury, in consultation with the 

12 Secretary of Energy and the Administrator of the Envi13 ronmental Protection Agency, shall conduct a study on the 

14 environmental, economic, and revenue impacts, and the 

15 carbon dioxide emissions in the United States, regarding 

16 the tax imposed by subchapter E of chapter 38 of the In17 ternal Revenue Code of 1986 (relating to carbon tax on 

18 primary fossil fuels). The Secretary shall submit each 

19 study to the Committee on Ways and Means of the House 

20 of Representatives and the Committee on Finance of the 

21 Senate. 

22 (c) CLERICAL AMENDMENT.—The table of sub23 chapters for chapter 38 of such Code is amended by add24 ing at the end thereof the following new item: 

‘‘SUBCHAPTER E. CARBON TAX ON PRIMARY FOSSIL FUELS.’’. 


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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to sales after December 31, 2011. 

3 SEC. 4. HEALTHY CLIMATE TRUST FUND. 

4 (a) ESTABLISHMENT OF TRUST FUND.—Subchapter 

5 A of chapter 98 of such Code (relating to trust fund code) 

6 is amended by adding at the end the following: 

7 ‘‘SEC. 9512. HEALTHY CLIMATE TRUST FUND. 

8 ‘‘(a) ESTABLISHMENT.—There is established in the 

9 Treasury of the United States a trust fund to be known 

10 as the ‘Healthy Climate Trust Fund’, consisting of such 

11 amounts as may be appropriated to such trust fund as 

12 provided for in this section. 

13 ‘‘(b) TRANSFERS.—There are appropriated to the 

14 Healthy Climate Trust Fund— 

15 ‘‘(1) for calendar year 2012, amounts equiva16 lent to the taxes received under section 6691, and 

17 ‘‘(2) for any calendar year after 2012, amounts 

18 equivalent to the taxes received under section 6691 

19 that are attributable to the excess of— 

20 ‘‘(A) the rate of tax in effect under such 

21 section for the calendar year, over 

22 ‘‘(B) $10. 

23 ‘‘(c) EXPENDITURES.— 

24 ‘‘(1) ADMINISTRATIVE EXPENSES.—Such 

25 amounts as may be necessary from the Healthy CliVerDate Mar 15 2010 20:22 Oct 25, 2011 Jkt 019200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\H3242.IH H3242

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1 mate Trust Fund shall be available to pay the ad2 ministrative expenses necessary to carry out this sec3 tion for each year, but not exceeding 0.50 percent of 

4 the amounts appropriated to such trust fund under 

5 subsection (b) in such year. 

6 ‘‘(2) CONSUMER DIVIDEND PAYMENTS.— 

7 Amounts in the Healthy Climate Trust Fund not 

8 used under paragraph (1) for any year shall be 

9 available for making consumer dividend payments 

10 under subsection (d) before February 15 of the fol11 lowing year. 

12 ‘‘(d) PAYMENT OF CONSUMER DIVIDEND.— 

13 ‘‘(1) IN GENERAL.—From amounts made avail14 able under subsection (c)(2), the Secretary shall 

15 make annual consumer dividend payments to each 

16 individual who is an eligible individual for that year. 

17 ‘‘(2) CONSUMER DIVIDEND PAYMENT.—The 

18 term ‘consumer dividend payment’ means the indi19 vidual pro-rata share, as determined by the Sec20 retary, of amounts available for the year in the 

21 Healthy Climate Trust Fund under subsection 

22 (c)(2). 

23 ‘‘(3) ELIGIBLE INDIVIDUAL.—The term ‘eligible 

24 individual’ means, with respect to any year, any in25 dividual with a TIN (other than a nonresident alien 


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1 individual) who is lawfully present in the United 

2 States for such month, as determined and verified 

3 by the Secretary in consultation with any other Fed4 eral entity the Secretary determines appropriate. 

5 ‘‘(4) TAX TREATMENT OF PAYMENTS.— 

6 Amounts paid under this subsection shall be includ7 ible in gross income. 

8 ‘‘(e) REPORT TO CONGRESS.—Not later than June 

9 1, 2013, and at least annually thereafter, the Secretary 

10 shall transmit to Congress a report accounting for the dis11 position of amounts in the Healthy Climate Trust Fund 

12 in the previous calendar year. 

13 ‘‘(f) HEALTHY CLIMATE TRUST FUND WEBSITE.— 

14 Not later than 90 days after the date of the enactment 

15 of this section, the Secretary shall establish and maintain 

16 a website to provide the public with information on the 

17 disposition of any amounts in the Healthy Climate Trust 

18 Fund. 

19 ‘‘(g) REGULATIONS.—The Secretary shall prescribe 

20 such regulations and other guidance as may be necessary 

21 or appropriate to carry out this section.’’. 

22 (b) CLERICAL AMENDMENT.—The table of sections 

23 for subchapter A of chapter 98 of such Code is amended 

24 by adding at the end the following new item: 

‘‘Sec. 9512. Healthy Climate Trust Fund.’’. 


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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall take effect on January 1, 2011. 

3 SEC. 5. DISCLOSURE OF INFORMATION. 

4 (a) LIMITED DISCLOSURE OF IDENTITY.—Subsection 

5 (l) of section 6103 of the Internal Revenue Code of 1986 

6 is amended by adding at the end the following new para7 graph: 

8 ‘‘(22) LIMITED DISCLOSURE OF IDENTITY IN9 FORMATION RELATING TO CONSUMER DIVIDEND

10 PAYMENTS.— 

11 ‘‘(A) DEPARTMENT OF THE TREASURY.— 

12 Individual identity information shall, without 

13 written request, be open to inspection by or dis14 closure to officers and employees of the Depart15 ment of the Treasury whose official duties re16 quire such inspection or disclosure for purposes 

17 of section 9512(d). 

18 ‘‘(B) COMMISSIONER OF SOCIAL SECU19 RITY.—The Commissioner of Social Security 

20 shall, on written request, disclose to officers 

21 and employees of the Department of the Treas22 ury individual identity information which has 

23 been disclosed to the Social Security Adminis24 tration as provided by paragraph (1) or (5). 


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1 ‘‘(C) RESTRICTION ON DISCLOSURE.—In2 formation disclosed under this paragraph shall 

3 be disclosed only for purposes of, and to the ex4 tent necessary in, carrying out section 

5 9512(d).’’. 

6 (b) CONFORMING AMENDMENTS.—Section 

7 6103(p)(3)(A) of the Internal Revenue Code of 1986 is 

8 amended by striking ‘‘or (21)’’ and inserting ‘‘, (21), or 

9 (22)’’. 

10 SEC. 6. EFFECTIVE DATE. 

11 The amendments made by this Act shall take effect 

12 on the date of the enactment of this Act. 

Æ 


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