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SECTION 1. SHORT TITLE.

This Act may be cited as the ''Raise Wages, Cut Carbon Act of
2009''.

SEC. 2. REDUCTION OF SOCIAL SECURITY TAXES; TAX ON COMBUSTIBLE FOSSIL
FUELS.

(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:

''Subchapter E--Reduction of Social Security Taxes; Tax on Combustible
Fossil Fuels

''Part I. Carbon Tax Revenues To Offset Social Security Taxes.

''Part II. Tax on Combustible Fossil Fuels.

''Part III. Tax on Certain Additional Imported Substances.

''Part IV. Supermajority Required To Change Revenue Neutrality

''PART I--CARBON TAX REVENUES TO OFFSET SOCIAL SECURITY TAXES

''Sec. 4691. Disposition of revenues.

''SEC. 4691. DISPOSITION OF REVENUES.

''(a) Amounts Appropriated to Social Security Trust Funds.--
''(1) In general.--There are hereby appropriated to the
social security trust funds an amount equal to the net revenues
received in the Treasury from the taxes imposed by parts II and
III.
''(2) Allocation among funds.--Amounts shall be
appropriated to such funds under paragraph (1) in the same
proportions as amounts would (but for this subchapter) be
appropriated to such funds under the Social Security Act and
the Railroad Retirement Act of 1974.
''(b) Reduction in Social Security Taxes.--
''(1) In general.--The rate of each social security tax for
each calendar year (determined without regard to this section)
shall be reduced by the number of percentage points equal to--
''(A) such rate, multiplied by
''(B) the reduction percentage determined by the
Secretary for such year.
''(2) Reduction percentage.--The reduction percentage
determined by the Secretary under paragraph (1) for any
calendar year shall be the highest percentage which the
Secretary estimates will result in deposits into each trust
fund equal to the amount which would (without regard to this
section) be appropriated to each trust fund for such year on
account of social security taxes.
''(c) Increase in Payments to Social Security Recipients for 2010
To Offset Cost of Carbon Tax Before Tax Reflected in Cost-of-Living
Adjustments.--The Secretary shall notify the Managing Trustee of the
Federal Old-Age and Survivors Insurance Trust Fund established under
section 201 of the Social Security Act to increase the payments to
which an individual is entitled under section 205(i) of such Act for
2010 by the average cost of the taxes imposed by parts II and III which
is borne by individuals who are so entitled by reason of price
increases in the costs of products and services.
''(d) Definitions.--For purposes of this subchapter--
''(1) Social security tax.--The term 'social security tax'
means--
''(A) the tax imposed by section 3101(a) (and so
much of the tax imposed by section 3201(a) as is
determined by reference to the tax imposed by section
3101(a)),
''(B) the tax imposed by section 3111(a) (and so
much of the tax imposed by section 3221(a) as is
determined by reference to the tax imposed by section
3111(a)), and
''(C) the tax imposed by section 1401(a) (and so
much of the tax imposed by section 3211(a) as is
determined by reference to the taxes imposed by
sections 3101(a) and 3111(a)).
''(2) Social security trust fund.--The term 'social
security trust fund' means--
''(A) the Federal Old-Age and Survivors Insurance
Trust Fund established by section 202 of the Social
Security Act, and
''(B) the Social Security Equivalent Benefit
Account established under section 15A of the Railroad
Retirement Act of 1974.
''(e) Determination Based on Estimates.--Determination under
subsections (a) and (b) shall be made on the basis of estimates by the
Secretary. Proper adjustments shall be made to the extent prior
estimates were in excess of or less than more accurate amounts.
''(f) Publication of Rate Reductions.--Any adjustment under this
section of social security tax rates for any calendar year shall be
published in the Federal Register on or before November 1 of the
preceding calendar year.

''PART II--TAX ON COMBUSTIBLE FOSSIL FUELS

''Sec. 4692. Imposition of tax.
''Sec. 4693. Refunds or credits.
''Sec. 4694. Other definitions and special rules.

''SEC. 4692. 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 the carbon dioxide emissions potential 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) In general.--The applicable amount for any
calendar year is the amount determined under the
following table for such year, as adjusted under
subparagraph (B):

''In the case of calendar year-- The applicable
amount is--
2010............................................. $ 15.00
2011............................................. 15.98
2012............................................. 17.02
2013............................................. 18.13
2014............................................. 19.32
2015............................................. 20.58
2016............................................. 21.92
2017............................................. 23.35
2018............................................. 24.88
2019............................................. 26.50
2020............................................. 28.23
2021............................................. 30.07
2022............................................. 32.04
2023............................................. 34.13
2024............................................. 36.36
2025............................................. 38.73
2026............................................. 41.26
2027............................................. 43.95
2028............................................. 46.82
2029............................................. 49.88
2030............................................. 53.13
2031............................................. 56.60
2032............................................. 60.30
2033............................................. 64.23
2034............................................. 68.43
2035............................................. 72.89
2036............................................. 77.65
2037............................................. 82.72
2038............................................. 88.12
2039............................................. 93.87
2040 or thereafter............................... 100.00.

''(B) Inflation adjustment.--
''(i) In general.--The applicable amount
contained in the table under subparagraph (A)
for any calendar year after 2010 shall be
increased by an amount equal to--
''(I) such applicable amount,
multiplied by
''(II) the cost-of-living
adjustment determined under section
1(f)(3) for such calendar year,
determined by substituting 'calendar
year 2009' for 'calendar year 1992' in
subparagraph (B) thereof.
''(ii) Rounding.--Any increase determined
under clause (i) shall be rounded to the
nearest cent.
''(c) Taxable Carbon Substance.--For purposes of this subchapter,
the term 'taxable carbon substance' means--
''(1) coal (including lignite and peat),
''(2) petroleum and any petroleum product (as defined in
section 4612(a)(3)), and
''(3) natural gas,
which is extracted, manufactured, or produced in the United States or
entered into the United States for consumption, use, or warehousing.
''(d) 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 substance.

''SEC. 4693. REFUNDS OR CREDITS.

''(a) Sequestered Carbon.--Under regulations prescribed by the
Secretary, if a person uses a taxable carbon substance so that the
carbon associated with such substance will not be emitted, then an
amount equal to the amount of tax in effect under section 4692(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 4692.
''(b) Previously Taxed Carbon Substances Used To Make Another
Taxable Carbon Substance.--Under regulations prescribed by the
Secretary, if--
''(1) a tax under section 4692 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 section 4692. In any case to
which this subsection applies, the amount of any such credit or refund
shall not exceed the amount of tax imposed by section 4692 on the other
taxable fuel manufactured or produced (or which would have been imposed
by such subsection on such other fuel but for section 4692(d)).
''(c) 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.--If--
''(A) any person exports--
''(i) a taxable carbon substance, or
''(ii) any other product any portion of the
cost of which is attributable to the use of any
taxable carbon substance as an energy source
for the manufacture or production of such
product, and
''(B) such person establishes to the satisfaction
of the Secretary the portion of such cost which is
attributable to the tax under section 4692,
credit or refund (without interest) of such tax shall be
allowed or made to such person.
''(3) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to carry out the purposes of
this subsection.

''SEC. 4694. OTHER DEFINITIONS AND SPECIAL RULES.

''(a) Definitions.--For purposes of this subchapter--
''(1) United states.--The term 'United States' has the
meaning given such term by section 4612(a)(4).
''(2) Importer.--The term 'importer' means the person
entering the article for consumption, use, or warehousing.
''(3) 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 manufactures, produces,
or imports any taxable carbon substance and uses such substance, then
such person shall be liable for tax under section 4692 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 paragraph (2), 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 4692, 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).

''PART III--TAX ON CERTAIN ADDITIONAL IMPORTED PRODUCTS

''Sec. 4695. Imposition of tax.
''Sec. 4696. Imported taxable product.

''SEC. 4695. IMPOSITION OF TAX.

''(a) In General.--There is hereby imposed a tax on any imported
taxable product sold or used by the importer thereof.
''(b) Amount of Tax.--The amount of the tax imposed by subsection
(a) with respect to any imported taxable product shall be the
applicable amount under section 4692 per ton on the lesser of--
''(1) the taxable carbon substances used in the manufacture
or production of such product, or
''(2) the carbon dioxide emissions attributable to the
manufacture or production of such product.
''(c) Procedure To Challenge Information Provided by Importer.--The
Secretary shall establish a procedure under which interested persons
may examine the information provided by an importer for purposes of
this section, and bring to the attention of the Secretary any suspected
errors in such information.

''SEC. 4696. IMPORTED TAXABLE PRODUCT.

''(a) In General.--For purposes of this part, the term 'imported
taxable product' means any article which, at the time of such article's
sale or use by the importer, is described in the same heading of the
Harmonized Tariff Schedule of the United States as a like article
produced in a listed industry.
''(b) Listed Industry.--For purposes of this section--
''(1) In general.--Except as provided in paragraph (2), the
term 'listed industry' means any industry listed by the
Administrator as being among the industries which, in the
aggregate, account for 95 percent of the taxable carbon
substances used in the United States. An industry may not be
omitted from the list under the preceding sentence if it uses
more taxable carbon substances per unit of output than any
industry which is so listed.
''(2) Special rule for 2010 through 2012.--
''(A) 2010.--During 2010, the term 'listed
industry' shall include only the 6 industries on the
list under paragraph (1) having the highest average use
of taxable carbon substances per unit of output.
''(B) 2011 and 2012.--During 2011 and 2012, the
term 'listed industry' shall include only--
''(i) the industries described in
subparagraph (A), and
''(ii)(I) in the case of 2011, the /3\ of
the remaining industries on such list having
the highest average use of taxable carbon
substances per unit of output, or
''(II) in the case of 2012, the /3\ of
the remaining industries on such list having
the highest average use of taxable carbon
substances per unit of output.
''(c) Other Definitions.--For purposes of this part, the terms
'importer', 'taxable carbon substance', and 'United States' have the
respective meanings given such terms by part II.

''PART IV--SUPERMAJORITY REQUIRED TO CHANGE REVENUE NEUTRALITY

''SEC. 4697. SUPERMAJORITY REQUIRED.

''A bill, joint resolution, amendment to a bill or joint
resolution, or conference report that increases aggregate revenues
under parts II and III greater than the aggregate reduction in revenues
under part I may not be considered as passed or agreed to by the House
of Representatives or the Senate unless so determined by a vote of not
less than two-thirds of the Members of the House of Representatives or
the Senate (as the case may be) voting, a quorum being present.''.
(b) Clerical Amendment.--The table of subchapters for chapter 38 of
such Code is amended by adding at the end the following new item:

''subchapter f. reduction of social security taxes; tax on combustible
fossil fuels''.

(c) Effective Date.--The amendments made by this section shall take
effect on January 1, 2010.
Raise Wages, Cut Carbon Act of 2009 - Amends the Internal Revenue Code to impose an environmental tax on: (1) any taxable carbon substance (i.e., coal, including lignite and peat, petroleum and any petroleum product, and natural gas that is extracted, manufactured, or produced in, or imported into, the United States); and (2) imported taxable products that account for a specified level of carbon substances used in the United States. Sets the amount of the tax at $15.00 per ton in 2010, and increases and adjusts for inflation such amount each year until the tax is $100 in 2040 and in subsequent years.

Provides for a reduction in social security taxes by an amount determined by the Secretary of the Treasury to reflect the amount of revenues generated by the taxes imposed by this Act. Appropriates net revenues from such taxes to the social security trust funds.

Requires a two-thirds vote of the House of Representatives or the Senate to increase the amount of the tax on taxable carbon substance or imported products beyond the amount required to compensate for the aggregate reduction in revenues resulting from the lower rates of social security taxes provided by this Act (i.e., revenue neutrality).