Minnesota Introduces World's First Carbon Tariff 303
hollywoodb writes "The first carbon tax to reduce the greenhouse gases from imports comes not between two nations, but between two states. Minnesota has passed a measure to stop carbon at its border with North Dakota. To encourage the switch to clean, renewable energy, Minnesota plans to add a carbon fee of between $4 and $34 per ton of carbon dioxide emissions to the cost of coal-fired electricity, to begin in 2012 ... Minnesota has been generally pushing for cleaner power within its borders, but the utility companies that operate in MN have, over the past decades, sited a lot of coal power plants on the relatively cheap and open land of North Dakota, which is preparing a legal battle against Minnesota over the tariff."
culmination of quite a long attempt (Score:5, Informative)
Minnesota's attempt to do this dates back nearly 20 years, long before the current global-warming political debate, so interesting to see it finally passing. I believe the first bill was proposed in 1992, which would've imposed a $6 per ton tax; here's a 1994 report [ilsr.org] by a MN environmental group as well. Major attempts seemed to happen every 3-5 years.
Re:culmination of quite a long attempt (Score:5, Interesting)
SO i can pass a bill in my state that allows me to tax your state? I think I see a solution to our states fiscal problem.
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The problem is that if the tax only applies to goods that are imported from a neighboring state, that's taxing interstate commerce, which is not allowed at the state level.
California can't put a special state tax on cheese imported from Oregon. This is exactly the same concept.
Minnesota Carbon Tariff is Illegal (Score:3, Insightful)
No state may regulate interstate commerce. One can find that written in the U.S. Constitution. The legislature in Minnesota needs an education in civics.
Re:Minnesota Carbon Tariff is Illegal (Score:5, Informative)
It's not nearly that clear in this case. The tax is only applied to companies doing business in Minnesota, and is only assessed on the portion of their business considered to impact Minnesota (i.e. emissions actually generated in Minnesota, emissions imputed to electricity transmitted in Minnesota, etc.). It's at least arguable that that doesn't violate the dormant commerce clause: MN isn't specifically taxing only imports and exempting in-state MN electricity generators, which is the usual inter/intra-state disparity in treatment that caused constitutional problems; nor is the state attempting to tax companies that don't do business in MN.
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Exactly. I think that MN would argue that they're not taxing interstate commerce, but ALL commerce that meets the criteria -- of which much happens to be out of state.
It's Even More Complicated Than that (Score:5, Interesting)
Now, this requires Minnesota to prove that the coal generated electricity is a threat to health and or safety of its citizens. That's going to be hard to do. But as your other post pointed out [slashdot.org], they've been going about this for quite sometime but I'm sure every year they feel closer to being able to prove this is legal on account of public safety.
It's even worse (Score:5, Informative)
Gonzales v. Raich [wikipedia.org] - A woman in California grew medical marijuana (legal in CA) and gave it away for free, solely within California. This was defined as interstate commerce in the decision.
US v. Stewart [wikipedia.org] - Stewart personally designed and built his own homebrew machine guns, not for sale. After he was busted by the feds, he lost the case but won on appeal. The government appealed the case to the Supreme Court. It was remanded by the Supreme Court back to the appellate court for reconsideration "in light of" Raich. This means that the Supreme Court considers Stewart's actions to be interstate commerce too.
In conclusion, "interstate commerce" is now de facto defined as "anything the Federal government wants to regulate, even if there is no commercial or interstate aspect". Naturally, I imagine that this flexible definition is reserved for the Feds use only--no doubt states will have to continue to use the actual definition (ie. what the Constitution actually means).
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As far as "what the Constitution actually means", it's not clear that there is actually a blanket ban on states regulating interstate commerce--- there is textually no such ban. It's been inferred from the commerce clause to form the so-called dormant commerce clause [wikipedia.org]. But yes, under existing precedent the dormant c
The original, Wickard v. Filburn (Score:4, Informative)
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Well, despite your assertion, that's exactly what they did in the Stewart case. Anyway, your arguments seem to be summarized by your final statement:
You beg the question... under which Constitutionally-enumerated power does the Federal government have the ability to design
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Is it just me, or did the government claim in Raich that consuming your own marijuana affects the interstate marijuana trade and that causes your marijuana or personal consumption to become interstate commerce? Is the government really trying to say that if I use marijuana I grow myself that I am hurting people who are importing marijuana? I know I must have read that wrong.
Nope, you read it right. It's the court that is wrong, and absurdly so. I recommend a read of Justice Thomas' dissenting opinion--it's pretty scathing and spot-on.
Re:It's Even More Complicated Than that (Score:5, Informative)
Au contraire, mon frere. This issue has been proved already in federal court, relating to federal lawsuits brought by NJ under the Clean Air Act to stop dirty coal-fired plants in upwind states (PA, OH, WV, maybe more).
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Why don't they tax there own people who get power from coal plants?
If they truly want clean energy, and not revenue generation, that would be the logical way to go.
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Isn't that equivalent? It's more or less a sales tax on electricity, pro-rated by how much carbon was used to generated the electricity. They could collect the sales tax from the purchaser, or from the seller; usually sales taxes are collected from sellers, because it's easier to administer such a system.
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It's not nearly that clear in this case.
It's pretty clear that it fails the duck test [wikipedia.org]. Whether that's enough for the courts or not (and the mere suggestion that it wouldn't be) might boggle the imagination.
Church is in session (Score:3, Funny)
The reverends of Church of Climatology will now ADDRESS YOU!!!!!
Its about time (Score:3, Insightful)
Not having a "tax" on environmental damage causes everyone who is effected by damage to the environment to subsidize industry that damages the environment.
While it is hard to put a monetary value on environmental damage, its obviously not $0. If an industry is making money damaging the environment, that may be fine, but some of the money really should go to everyone living in the damaged environment.
Its also nice to see individual states take the lead in issues like this.
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Its also nice to see individual states take the lead in issues like this.
Yes, it is nice to see individual states taking a lead in dramatically raising energy costs, especially in a recession. It only further proves how utterly incompetent our leaders. While taking energy is stupid in the first place, even if a country or state is dead set on doing it, only a moron would do it DURING A RECESSION when people don't have the money to pay the tax. Taxing energy raises all costs - do you really thing the people of Minnesota can afford to pay more for heat, fuel for cars, food, lig
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Please define 'dramatic' in numerical terms.
Re:Its about time (Score:5, Insightful)
I prefer to just quote Obama: electricity rates will “skyrocket”. That’s “dramatic” enough for me.
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Incompetent? No, I think they know exactly what they're doing: Some bureaucrats smell a cash opportunity, and want to milk it. This is *especially* important during a recession, as they need to also justify their payrolls - now they can look like they're "doing something" while raising the cash to keep paying their salaries, whilst otherwise voters would send them to the streets.
Basically the economic climate naturally increases the pressure for smaller government, while those politicians who know they aren
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There is no good time to tax energy, because it's a stupid thing to do. All I said was that if you're going to insist on doing something economically damning, don't do it during the second worst economy in the history of the country.
But if we don't start doing it soon, when that source runs out, we won't have the technology or the infrastructure to replace it.
When we actually are in danger of running out, people will start to change over. Why? Well first, because there will be people wanting to make money by being one of the major non-fossil fuel energy sources. Secondly, there will be the natural self-preservation instinct. Thir
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All taxes effectively raise prices, either directly (making things more expensive) or indirectly (reducing the amount of income you have to spend on them). Sane tax policy is picking taxes that do the least harm to the economy.
First, I never argued against taxes, I argued against taxing energy. Secondly, taxing energy makes EVERYTHING cost more. At every step of production, transportation, and sales, prices go up. It is the worst kind of tax because EVERYTHING relies on energy at some point in the production / sales chain. Even a book requires energy to get the lumber, transport the lumber, turn the lumber into paper, get the paper to the printing facility, run the printing facility, print the book, transport the book to the
Obvious, but... (Score:5, Insightful)
How, exactly, will this force "cleaner" electricity generation?
What will be done with the money from these tariffs? Will it only be used for environmental concerns, or will it just go into the general budget?
Probably Wind Incentives to Companies (Score:5, Interesting)
This will, of course, ultimately be passed on to the customers. Ultimately, this is a way to raise taxes to force a change in private industry. The government keeps the money, and we the people pay the taxes. It won't hurt the companies in this case because there is no choice in electricity providers. You can't switch electric companies like you can cell phone companies. How, exactly, will this force "cleaner" electricity generation? What will be done with the money from these tariffs? Will it only be used for environmental concerns, or will it just go into the general budget?
Minnesota has grown to be fourth in Wind Power generation [windpoweringamerica.gov]. And if you look at time lapse growth [windpoweringamerica.gov] they're really pushing that. The weird thing about it is that they're not even one of the prime wind resource states [windpoweringamerica.gov] although I will testify that the wind gets ridiculous out there. Now, you probably already know this but Tim Pawlenty (Republican) [state.mn.us] is the governor of Minnesota and of course is going to try to get a bid for the presidential run in 2012. On his about page:
implementing a plan to Americanize our energy sources by generating 25% of the state's electricity from renewable sources by 2025
As a moderate Democrat, I was kind of afraid when he almost got a bid in 2008 ... because he's actually not that bad of a candidate. He doesn't talk like a moron and he's got his head in a lot of the right places. If he would cut the Christian God talk out of his speeches, I'd probably be on board. Sorry to get offtopic but I'm trying to say that this tariff would probably be a huge in road for him to moderates if he could pull it off. I'm certain he's not the prime motivator behind this but I would bet that they'd take the taxes from this and dump it into wind incentives. They're racing against Iowa in the wind department. California and Texas are too big and too prime locations to take on for Megawatt generation from wind power.
That is where I bet they would take this money: incentives to corporations for wind power.
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It makes cleaner electricity generators more competitive because, as you point out, it raises the price of their competitors' product (electricity from coal-fired generators). A tax on a competitor is basically an indirect subsidy.
It is Obvious...Way to go MN!!! (Score:2)
Question...Why can't you change energy companies?
Energy has been deregulated for some time now. The owners of the power lines are forced to lease them to anyone. I live in Georgia and have the option of 3 different companies.
This law will encourage people to use power more efficiently. In addition it helps remove the subsidy that Coal powered electricity has enjoyed for most of the last century. (And yes it is subsidized through legal protections and by not having to clean up much of its environmental d
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The claim is used frequently, by people who have no business knowledge at all, and it's almost always used incorrectly.
In truth, higher costs are almost always only partially passed on to the customer, if at all.
Do you have any idea what subject you're discussing, or did you not make
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That way the local public utility infrastructure can be regulated by one set of rules, and the electricity providers by a different set. Makes sense to me. Now if we could only have the same separation of infrastructure and content with the cable companies...
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You can't switch electric companies like you can cell phone companies.
In your state (and Minnesota?), that might be true. In mine, it's not. I have the choice of many power generation companies:
http://powertochoose.org/ [powertochoose.org]
I can choose variable rates or fix my electricity rate for up to 24 months. I can also choose electricity solely from renewable sources (it's usually a fraction of a cent per kilowatt-hour more, compared to non-renewable sources from the same provider).
Rather than imposing a tax on producers, Minnesota legislators should consider giving consumers th
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How exactly?
Easy. Just like you said, the cost of the tax will be passed on to customers. As taxed carbon-based energy grows more expensive, consumers will turn to cleaner forms of energy that will be relatively cheaper, and companies will increase its production to meet the increased demand for cleaner energy.
Also, there may be no choice between electricity providers, but providers can offer a choice between clean and dirty energy. Portland General Electric does this. It costs slightly more but PGE guarant
I happen to favor this (Score:5, Insightful)
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However, I have long though that those things which are blatantly harmful to human beings, and the planet in general, should have enough economic disincentives as to make them all but beyond the ability of anyone to procure.
How about the things such as coal burning plants which aren't "blatantly harmful" to human beings? I recognize there is some pollution issues with coal burning. It produces small amounts of sulfur dioxides, nitrates, and even introduces more radiation than nuclear plants. They also provide electricity to people and businesses. Benefits outweigh the minor harm.
I'm frankly tired of seeing the economic incentives of "cheap" and "profitable" driving harmful things.
I'm frankly tired of seeing things which are not harmful being labeled as "harmful".
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However, when you look at what all it takes to run a
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Inefficient use of finite resources IS blatantly harmful, to anyone involved.
If it is cheaper, then it isn't less efficient. And merely being relatively inefficient in the consumption of some resource isn't blatantly harmful to anyone.
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You have to look at total cost in terms of calculating efficient use of resources.
Markets do an excellent job of that. The problem reduces to pricing in externalities. The use of resources for which you paid, isn't an externality.
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We're not going to run out of iron. Ever. And the steel in a car is a tiny fraction of the environmental impact of the car over it's lifetime, so it's not like re-using enough wire hangers to equal the weight of steel in a car offsets the vehicle.
If you're going to look at the environmental impact of dry-cleaning, the washing process itself and the car trip to deliver a few shirts and the employees of the store dwarf a few coat-hangers. And the form the better part of the expenses of the company, and are
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I'm frankly tired of seeing things which are not harmful being labeled as "harmful".
Well, since toxicity is related to dosage rather than substance, one could argue that everything is harmful, and should be regulated, taxed, and carry a warning label, which is where a lot of the alarmists would like to take us.
That being said, coal-fired power plants suck ass is a major way, and fuck up the environment for lots of people who bear none of the benefits of that plant. The water here in the northeast has been plagued for decades by acid rain produced by power plants in the midwest. The lo
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Are you going to volunteer to have the exhaust pass over your home? Do you even live within 10 miles of a coal power plant?
I have before. And sure, I don't see the problem with having the exhaust pass over my house.
They aren't clean, and they cost lots of money each month to run.
Well, then I'm glad I don't have to clean one up or pay to keep it running.
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should have enough economic disincentives as to make them all but beyond the ability of anyone to procure
I prefer to think of it as balancing the books. If you actions are responsible for pumping x amount of pollution into the atmosphere then you should be responsible for cleaning it up. This cleaning up can happen in various ways, in the example of using electricity from coal fired power stations and only considering the CO2 pollution:
. The electricity company plants some trees or otherwise sucks the pollution out of the air, and charges you an increased rate for doing so
. The electricity company pays a third
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>AGW. Which appears to be up for debate
LOL
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Only if you're a conservative American. Curiously enough that's about the same demographic that still believes the earth is 6000 years old.
Seriously, guys. You were all saying that GW didn't exist a few years ago. Now it exists but isn't manmade. In 10 years you'll be saying that it exists, is manmade, but we can't do anything about it. Do you ever have a thought glennn beck doesn't think first?
I am proud (Score:2, Funny)
This qwill fail; (Score:2, Insightful)
you can't tariff another state..you can TAX the hell out of electricity from that state. tariff and tax is not the same thing.
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I may be wrong but I think that in this case, it is the same thing.
Them are fightin words (Score:2)
I smell War! North Dakota should invade!
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Until not that long ago, wasn't North Dakota something like the world's #3 or #4 nuclear power? Between the missile silos and the airbases in Grand Forks and Minot, I think they had plenty of nukes.
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Of course (Score:2)
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You miss the point. They're increasing the price of electricity as currently provided in order to create incentives to provide alternate forms of electricity generation.
Coal is dirty and cheap. As long as it stays cheap, there is little incentive to use more expensive alternate sources. If they make coal artificially expensive, it becomes economically feasible to invest in alternate sources. Once they're commoditized, the alternate sources may become cheaper, bringing the price of electricity back down.
I guess the State of Minnesota... (Score:5, Insightful)
Why do governments so often fail to consider the effects of disincentives? For example, when raising taxes, they calculate expected increases in revenue while underestimating changes in the behavior of the taxed. They always act surprised when the expected additional revenues don't materialize, or indeed revenues fall.
Perhaps it has something to do with most elected officials being lawyers and not businessmen, engineers, etc.
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Why do governments so often fail to consider the effects of disincentives?
Huh? That's exactly what this is all about. They're trying to get people to stop using coal. They're not failing to consider the disincentives, the whole point of this tax is to create a disincentive. If everyone stops using coal and they end up generating no revenue at all with this tax, they will consider the tax to have been wildly successful.
All I can say is -- (Score:3, Funny)
-- what's next? A fat tax? If so, Minnesota might just tax itself into oblivion.
How wrong can a /. story be? (Score:2)
Maybe just the headline is misleading, but... (Score:2)
British Columbia has had a carbon tax for a couple of years.
http://www.cbc.ca/canada/british-columbia/story/2008/04/29/bc-gas-prices-carbon-tax.html [www.cbc.ca]
Pollution (Score:2)
Given the prevailing Westerlies, most of that pollution from those Dakotan coal plants gets pushed over Minnesota, delivering acid-rain and whatever else to Minnesotans. Yet because these electricity producers have government-given guarantees that they need take no responsibility for such damages, Minnesotans (and others further away) have to suffer the consequences without recompense.
Wonderful! (Score:2)
No action here folks, move along (Score:4, Insightful)
So in 2012 someone might think about taxing CO2 emissions. Not cutting them, taxing them. Too late.
What we need is action now. Action like massive taxes on the construction of fossil fuel-powered power plants, so that the CO2 absorbtion systems (i.e. trees) can be ready at approximately the same time as new emissions start, and alternatives can be financed before new power plant starts emitting.
Vik :v)
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What's unconstitutional about it?
Re:UNCONSTITUTIONAL (Score:5, Funny)
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A quick grep of the constitution shows no references to vibes.
It's kind of funny the Scientific American article says "that this would unfairly discourage coal-powered electricity sales in favor of renewably powered electricity". I'd hardly call this unfair. More poignantly, I'd say that's the purpose of the bill, and if North Dakota is suing my state, it's because the bill will work.
Yes, this may marginally increase the cost of manufacturing some kinds of goods but the overall impact will largely affect th
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Re:UNCONSTITUTIONAL (Score:5, Informative)
Interstate trade is regulated by Congress, according to the constitution. Courts have held that all taxes on trade between states are an unconstitutional restraint on trade. The only exception is alcohol, which is granted an exception by the 21st amendment.
Re:UNCONSTITUTIONAL (Score:5, Insightful)
Re:UNCONSTITUTIONAL (Score:4, Insightful)
The tax is a Tariff, which by definition, is a tax on imports. Minnesota can tax consumers directly for the carbon they use if they so choose, but they may not tax imports of coal into their state. They can tax the use of coal by utilities in their state, but not the importation of coal into their state. If indeed this is a tax on imports of anything (except alcoholic beverages) from North Dakota, then the courts would strike that down in a preliminary hearing.
This has nothing to do with your political leanings; it's pure constitutional law as I (I'm not a lawyer) understand it.
Re:UNCONSTITUTIONAL (Score:4, Funny)
Well, that makes you a raving lunatic teabagger because anyone who questions the noble purpose of carbon reduction is obviously insane and/or mentally deficient. A pox on your "constitution".
Ottertail Power (Score:2)
"it's true that much of MN's coal-based energy comes from ND"
Big Stone is in SD. I think they get their coal from Montana. I know the Hoot Lake plant does.
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Possibly correct- depending on how it's enacted. Every article so far refers to it as a Tariff- a tax on imports.
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This isn''t a tax on trade between states. It's a tax on carbon. It's perfectly neutral in theory -- no matter where your carbon-based energy comes from, it gets hit with the tax. Now, it's true that much of MN's coal-based energy comes from ND, so the law will impact imported power more than local power, but a luxury tax on high-priced wines is not unconstitutional because more wine is grown in California and imported to Minnesota rather than grown in Minnesota. This is no different. There's nothing unconsitutional going on here, it's a spurious argument being raised by people who oppose a carbon tax in principle.
Except that this isn't a tax on carbon, it is a tax on electricity based on how that electricity is generated. If that electricity is not generated in Minnesota, Minnesota is not constitutionally allowed to regulate how it is generated. Electricity generated using coal is indistinguishable from electricity generated by any other means.
Minnesota cannot legally tax carbon that is released in another state.
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Which raises another interesting point: Since when has business been able to violate our free speech rights? Why should *ANYBODY* be blocked from receiving scholarly material on the Commerce Clause by an inability to pay?
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That may be commonly understood by laymen but there must be some wiggle room. How else do you explain the widely varying taxation rate on tobacco sales? Some states have very small tax, like Missouri with their $.17 per pack tax, or Rhode Island with their $3.46 per pack tax.
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because they are taxing people within their state, for consuming things within their state?
Different interpretations of the law (Score:3, Informative)
There are multiple interpretations of the Interstate Commerce Clause. By some interpretations, States do have limited rights to regulate commerce with other states. Also, there seem to be additional interpretations of the law for state-owned services (See the paragraph on "In United Haulers Assoc. v Oneida-Herkimer Solid Waste Management Authority (2007)".
See the following site a good summary of some of the debates.
http://www.law.umkc.edu/faculty/projects/ftrials/conlaw/statecommerce.htm [umkc.edu]
"The Commerce Clause
Re:Different interpretations of the law (Score:5, Informative)
Yes, but Article I Section 10 specifically forbids the States from using Tariffs to regulate commerce.
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Interstate trade is regulated by Congress, according to the constitution. Courts have held that all taxes on trade between states are an unconstitutional restraint on trade. The only exception is alcohol, which is granted an exception by the 21st amendment.
You do realize that some states have a usage tax on items purchased in other states. So if you purchase something from Amazon, depending on your state, you need to pay the usage tax on those goods.
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Only the federal government has the authority to regulate interstate and foreign commerce. States can't levy tariffs on each other's goods because they were not given the constitutional authority to do so.
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Minor nit pick, they weren't not given the authority; they were told no that's congress's domain.
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Except that they presumably are not applying those same taxes to their own state residents. In other words, they have constructed an elaborate system that results in a tax paid only by folks from out-of-state. That is clearly unconstitutional.
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Oops. I had the story backwards. I had it that ND was imposing this tax on electricity leaving for MN, not the other way 'round.
It's still unconstitutional, though.
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Article I Section 10 States can't create Tariffs.
Personally, this is my most hated part of the Constitution- it prevents economic experimentation and competition between the States.
Re:UNCONSTITUTIONAL (Score:4, Interesting)
Article I Section 10 States can't create Tariffs.
Personally, this is my most hated part of the Constitution- it prevents economic experimentation and competition between the States.
I take it that you haven't read any early American history.
The tariff wars between New York and New Jersey were legendary, and were an explicit reason for this clause being put into the Constitution in the first place. For the few brief years after the Battle of Yorktown and before the U.S. Constitution was ratified, New York and New Jersey engaged in a trade war the likes of which have only been seen between England and France... perhaps even worse. Much of this centered on Manhattan and New York City, where goods in transit across the Hudson River were heavily regulated and there were bands of pirates/smugglers and other kinds of incredible headaches for all involved. Taxes of over 100% and even up to 1000% on some goods were imposed just to cross the Hudson River. It nearly started an all out war between those two states, where both armies and navies were being assembled for just that very purpose, and some shots were exchanged between uniformed military forces of both states.
There is a good reason why this clause was put into the Constitution in the first place, and a damn good reason why it should be respected and not tampered with for even a well meaning cause like "global warming".
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Except that it is putting a tariff on electricity generated in ND and imported into MN, which kinda is what that article forbids.
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It's not specifically a tariff, because they charge all electricity sold in MN the same cost, whether generated in- or out-of-state. That makes it more of a sales tax, which is constitutional.
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they are laying a tax* on imports, specifically energy.
"carbon fee of between $4 and $34 per ton of carbon dioxide emissions to the cost of coal-fired electricity, "
If you export you enerby to MN, they will tax it. It's pretty simple.
*imposts or duties
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If people don't want to see carbon taxed, they can point out that most of the coal-fired energy used in Minnesota actually comes from North Dakota, and then pretend that this is a case of an interstate tariff when it's nothing of the sort.
Except that it is a case of an interstate tariff. My prediction is that it will be overturned by the courts.
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Except that it is a case of an interstate tariff. My prediction is that it will be overturned by the courts.
I'm sure it won't be, precisely because it's not an interstate tariff, no matter how badly the Dakotas wish it was. The motives may be ultimately the same as a protectionist tariff, but the action itself is perfectly normal case of taxation. You can't overturn a cheese tax just because a lot of cheese gets imported from Wisconsin, you can't overturn a wine tax just because a lot of wine comes from California, and they won't overturn a carbon-tax just because a lot of coal-generated electricity comes from
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Hello....the price of coal-based power will go up, making it more economically feasible to produce power in a cleaner way. Once enough of that happens, the price goes back down due to economies of scale and commoditization.
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The summary is bad - they are taxing all electricity sourced from coal, not imported electricity.
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Doesn't matter. California can't put a special tax on the sale of cheese produced in Oregon, even if it applies only to Cheddar and not Monterey Jack.
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Die? This has already been smacked down, the eventual court case and what not are just formalities.