Sec. 4. Reduction of certain social security taxes; tax on combustible fossil fuels
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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: Part I—Reduction of certain social security taxes Part II—Tax on combustible fossil fuels Part III—Tax on certain additional imported products Part IV—Tax on fluorinated greenhouse gases Part V—Supermajority required To change revenue neutrality Sec. 4691. Social Security taxes and benefits. There are hereby appropriated to the social security trust funds an amount equal to the excess (if any) of— net revenues received in the Treasury from the taxes imposed by parts II, III, and IV, over the net expenditures from the Treasury under sections 2 and 3 of the Raise Wages, Cut Carbon Act of 2019 .
Amounts appropriated under paragraph
(1)shall be allocated among such funds as determined appropriate by the Managing Trustee of the Board of Trustees of the Trust Funds (within the meaning of title II of the Social Security Act), in cooperation with the Railroad Retirement Board. The rate of each specified social security tax for each calendar year (determined without regard to this section) shall be reduced by the number of percentage points equal to— such rate, multiplied by the reduction percentage determined by the Secretary for such calendar year. The reduction percentage determined by the Secretary under paragraph
(1)for any calendar year shall be the percentage which the Secretary estimates will result in aggregate appropriations into each trust fund equal to the amount which would (without regard to this section) be appropriated to each trust fund for such calendar year. For purposes of this subchapter— The term specified social security tax means— the tax imposed by section 3101(a) (and so much of the tax imposed by section 3201(a) or section 3211(a) as is determined by reference to the tax imposed by section 3101(a)), and 1/2 the tax imposed by section 1401(a). The term social security trust fund means— the Federal Old-Age and Survivors Insurance Trust Fund established by section 201(a) of the Social Security Act, the Federal Disability Insurance Trust Fund established by section 201(b) of the Social Security Act, and the Social Security Equivalent Benefit Account established under section 15A of the Railroad Retirement Act of 1974. Determinations under this section and sections 2 and 3 of the Raise Wages, Cut Carbon Act of 2019 shall be made on the basis of estimates by the Secretary. To the extent that any such determination for any period is determined to have been inaccurate, such determination for the subsequent period shall be appropriately increased or decreased by the amount that the previous determination was less than, or in excess of, the more accurate determination. Any adjustment under this section of social security tax rates for any calendar year shall be published in the Federal Register not later than 2 months before the beginning of such calendar year. Sec. 4692. Imposition of tax. Sec. 4693. Refunds or credits. Sec. 4694. Other definitions and special rules. There is hereby imposed a tax on any taxable carbon substance sold by the manufacturer, producer, or importer thereof. 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. 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. For purposes of this part, the applicable amount is— for calendar year 2020, $40, for any calendar year following a year which is not a national emissions target attainment year, the sum of— the product of the amount in effect under this subparagraph for the preceding calendar year and 102.5 percent, and the inflation adjustment amount determined under subparagraph (B), and for any calendar year following a year which is a national emissions target attainment year, the sum of— the amount in effect under this subparagraph for the preceding calendar year, and the inflation adjustment amount determined under subparagraph (B). The inflation adjustment amount for any calendar year shall be an amount (not less than zero) equal to the product of— the amount determined under subparagraph (A)(ii)(I) or (A)(iii)(I), as applicable, for such year, and the percentage by which the CPI for the preceding calendar year exceeds the CPI for the second preceding calendar year. Rules similar to the rules of paragraphs
(4)and
(5)of section 1(f) shall apply for purposes of this paragraph. The applicable amount under this subsection shall be rounded up to the next whole dollar amount. For purposes of subparagraph (A), a calendar year is a national emissions target attainment year if the level of greenhouse gas emissions in the United States for the calendar year does not exceed 20 percent of the level of greenhouse gas emissions in the United States for calendar year 2005 as determined by the Secretary in consultation with the Administrator of the Environmental Protection Agency. For purposes of this subchapter, the term taxable carbon substance means— coal (including lignite and peat), petroleum and any petroleum product (as defined in section 4612(a)(3)), and natural gas, which is extracted, manufactured, or produced in the United States or entered into the United States for consumption, use, or warehousing. 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. 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. Under regulations prescribed by the Secretary, if— a tax under section 4692 was paid with respect to any taxable carbon substance, and 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)). 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. Rules similar to the rules of section 4221(b) shall apply for purposes of subparagraph (A). If— any person exports— a taxable carbon substance, or 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 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. The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subsection. For purposes of this subchapter— The term United States has the meaning given such term by section 4612(a)(4). The term importer means the person entering the article for consumption, use, or warehousing. 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. 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. 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— such exchange shall not be treated as a sale, and such other person shall, for purposes of section 4692, be treated as the manufacturer, producer, or importer of such substance. Paragraph
(1)shall not apply to any inventory exchange unless— both parties are registered with the Secretary as manufacturers, producers, or importers of taxable carbon substances, and 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. 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). Sec. 4695. Imposition of tax. Sec. 4696. Imported taxable product. There is hereby imposed a tax on any imported taxable product sold or used by the importer thereof. 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— the taxable carbon substances used in the manufacture or production of such product, or the carbon dioxide emissions attributable to the manufacture or production of such product. 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. 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. For purposes of this section— 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. During 2020, 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. During 2021 and 2022, the term listed industry shall include only— the industries described in subparagraph (A), and in the case of 2021, the 1/3 of the remaining industries on such list having the highest average use of taxable carbon substances per unit of output, or in the case of 2022, the 2/3 of the remaining industries on such list having the highest average use of taxable carbon substances per unit of output. For purposes of this part, the terms importer , taxable carbon substance , and United States have the respective meanings given such terms by part II. There is hereby imposed a tax on any fluorinated greenhouse gas which is required to be reported under part 98 of title 40, Code of Federal Regulations. The tax imposed under subsection
(a)shall be paid by the person required to so report in an amount equal to— the total amount, in metric tons of CO 2 -e, of emitted fluorinated greenhouse gases (or, in the case of a supplier, emissions that would result determined under the rules of such part), multiplied by an amount equal to 10 percent of the applicable amount in effect under section 4692 for the calendar year of such emission. A bill, joint resolution, amendment to a bill or joint resolution, or conference report that increases aggregate revenues under parts II, III, and IV greater than the aggregate of— the reduction in revenues under part I, and the aggregate expenditures under sections 2 and 3 of the Raise Wages, Cut Carbon Act of 2019 , 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. . 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 . The amendments made by this section shall take effect on January 1, 2020.