as if it were an overpayment of tax imposed by section 
4691. 
‘‘(b) OFFSET PROJECTS.— 
‘‘(1) IN
GENERAL.—Under regulations pre-
scribed by the Secretary, if a person carries out a 
qualified offset project, 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 project is completed 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. 
‘‘(2) QUALIFIED OFFSET PROJECT.—For pur-
poses of paragraph (1), the term ‘qualified offset 
project’ means a project carried out in the United 
States that— 
‘‘(A) reduces greenhouse gas emissions, 
‘‘(B) sequesters a greenhouse gas, or 
‘‘(C) destroys hydrofluorocarbons. 
‘‘(3) EXCEPTION.—Such term does not include 
a project that involves enhanced oil recovery. 
‘‘(c) PREVIOUSLY
TAXED
CARBON
SUBSTANCES 
USED
TO MAKE ANOTHER TAXABLE CARBON SUB-
STANCE.—Under regulations prescribed by the Secretary, 
if— 
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‘‘(1) a tax under section 4691 was paid with re-
spect to any taxable carbon substance, and 
‘‘(2) such substance was used by any person in 
the manufacture or production of any other sub-
stance 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 im-
posed by subsection (a). In any case to which this para-
graph 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)). 
‘‘(d) EXEMPTION FOR EXPORTS.— 
‘‘(1) TAX-FREE SALES.— 
‘‘(A) IN GENERAL.—No tax shall be im-
posed under subsection (a) on the sale by the 
manufacturer or producer of any taxable carbon 
substance for export or for resale by the pur-
chaser 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.— 
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‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), if— 
‘‘(i) tax under subsection (a) was paid 
with respect to any taxable carbon sub-
stance, 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 sub-
stance, 
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 ex-
ported the taxable carbon substance, or 
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‘‘(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
EX-
PORTER.—The Secretary shall provide, in regu-
lations, 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 sub-
stance, 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 informa-
tion as the Secretary may require in such 
regulations. 
‘‘(3) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary to carry 
out the purposes of this subsection. 
‘‘SEC. 4693. DEFINITIONS AND SPECIAL RULES. 
‘‘(a) DEFINITIONS.—For purposes of this sub-
chapter— 
‘‘(1) TAXABLE CARBON SUBSTANCE.—The term 
‘taxable carbon substance’ means— 
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‘‘(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 2,000 
pounds. 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 
2,000 pounds on a molecular weight basis. 
‘‘(b) USE TREATED AS SALE.—If any person manu-
factures, produces, or imports any taxable carbon sub-
stance 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
EX-
CHANGES.— 
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‘‘(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 ex-
change 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 manufac-
turer, producer, or importer of such substance. 
‘‘(2) 
REGISTRATION
REQUIREMENT.—Para-
graph (1) shall not apply to any inventory exchange 
unless— 
‘‘(A) both parties are registered with the 
Secretary as manufacturers, producers, or im-
porters of taxable carbon substances, and 
‘‘(B) the person receiving the taxable car-
bon substance has, at such time as the Sec-
retary may prescribe, notified the manufac-
turer, 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 
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‘‘(3) For calendar year 2010, 4⁄5 of the amount 
made available under paragraph (1) for calendar 
year 2008. 
‘‘(4) For calendar year 2011, 7⁄10 of the amount 
made available under paragraph (1) for calendar 
year 2008. 
‘‘(5) For calendar year 2012, 3⁄5 of the amount 
made available under paragraph (1) for calendar 
year 2008. 
‘‘(6) For calendar year 2013, 1⁄2 of the amount 
made available under paragraph (1) for calendar 
year 2008. 
‘‘(7) For calendar year 2014, 2⁄5 of the amount 
made available under paragraph (1) for calendar 
year 2008. 
‘‘(8) For calendar year 2015, 3⁄10 of the amount 
made available under paragraph (1) for calendar 
year 2008. 
‘‘(9) For calendar year 2016, 1⁄5 of the amount 
made available under paragraph (1) for calendar 
year 2008. 
‘‘(10) For calendar year 2017, 1⁄10 of the 
amount made available under paragraph (1) for cal-
endar year 2008. 
‘‘(11) For calendar years after 2017, zero.’’. 
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(c) 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. 9511. Taxable Carbon Substances Trust Fund.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on January 1, 2008. 
SEC. 3. CARBON TAX REBATE OF PAYROLL TAX. 
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to refundable credits) is amended by redes-
ignating section 36 as section 37 and inserting after sec-
tion 35 the following new section: 
‘‘SEC. 36. 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 sec-
tion, the term ‘carbon tax rebate’ means with re-
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spect 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 
9511(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 avail-
able under section 9511(c)(3) for the succeeding tax-
able 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 indi-
vidual 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, de-
termined after taking into account any refund 
under section 31(b) and 6413(c), or 
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‘‘(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 bene-
fits 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 indi-
vidual for such individual’s taxable year if a deduction 
under section 151 with respect to such individual is al-
lowed 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 be-
fore the period ‘‘, or from section 36 of such Code’’. 
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(2) The table of sections for subpart C of part 
IV of subchapter A of chapter 1 of the Internal Rev-
enue Code of 1986 is amended by redesignating sec-
tion 36 as section 37 and inserting after section 35 
the following new section: 
‘‘Sec. 36. Carbon tax rebate of payroll tax. 
‘‘Sec. 37. Overpayments of tax.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2007. 
SEC. 4. STUDY OF TAXATION OF NON-CARBON GREEN-
HOUSE 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 legisla-
tive recommendations as the Secretary determine appro-
priate for the assessment and collection of such tax. 
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SEC. 5. SENSE OF CONGRESS THAT OTHER NATIONS WILL 
JOIN WITH THE UNITED STATES IN REDUC-
ING GREENHOUSE GAS EMISSIONS. 
It is the sense of Congress that the major greenhouse 
gas emitting countries join with the United States in re-
ducing greenhouse gas emissions. 
Æ 
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