Short title

This Act may be cited as the

Carbon Reduction and Tax Credit Act

Excise tax on carbon content of fuels

(a)

In general

Chapter 38 of the Internal Revenue Code of 1986 is amended by adding at the end thereof the following new subchapter:

Carbon Content Fee

Sec. 4691. Carbon content.

4691.

Carbon content

(a)

In general

In the case of a coal mine or an oil or gas well, there is hereby imposed a tax equal to $40 per ton of carbon contained in fuel produced— (1)at such mine or well located in the United States or, (2)entered into the United States for consumption, use, or warehousing. (b)

Adjustment for years after 2018

(1)

In general

In the case of any calendar year after 2019, the amount under subsection (a) shall be increased by an amount equal to— (A)such amount, multiplied by (B)the cost-of-living adjustment determined under section 1(f)(3) for such calendar year, determined— (i)by substituting calendar year 2018 for calendar year 2016 in subparagraph (A)(ii) thereof, and (ii)by substituting for the C–CPI–U referred to in section 1(f)(3)(A) the amount that such CPI would have been if the annual percentage increase in CPI with respect to each year after 2018 had been one percentage point greater. (2)

Terms related to CPI

(A)

Annual percentage increase

For purposes of subparagraph (B)(ii)(II), the term annual percentage increase means the percentage (if any) by which C–CPI–U for any year exceeds the C–CPI–U for the prior year. (B)

Other terms

Terms used in this paragraph which are also used in section 1(f)(3) shall have the same meanings as when used in such section. (3)

Rounding

Any increase determined under subparagraph (B) shall be rounded to the nearest multiple of $50.

(b)

Clerical amendment

The table of subchapters for chapter 38 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:

Subchapter E—Carbon Content fee

(c)

Effective date

The amendments made by this section shall apply to fuel produced after December 31, 2018.

Credit

(a)

In general

Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to refundable credits) is amended by inserting after section 36B the following new section:

36C.

Credit for taxpayers

(a)

Allowance of credit

There shall be allowed as a credit against the tax imposed by this chapter for the taxable year with respect to each taxpayer who is an individual and each dependent of the taxpayer an amount equal to $1,000. (b)

Limitation based on adjusted gross income

The amount of the credit allowable under subsection (a) shall be reduced (but not below zero) by $100 for each $1,000 (or fraction thereof) by which the taxpayer’s adjusted gross income exceeds $314,000 ($157,000 in the case of a return other than a joint return). (c)

Inflation adjustment

In the case of a taxable year beginning after 2018, the dollar amounts in subsection (a) and (b) shall be increased by an amount equal to— (1)such dollar amount, multiplied by (2)the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting 2017 for 2016 in subparagraph (A)(ii) thereof.

If any increase under this clause is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50.

(d)

Nonresident alien ineligible for credit

No credit shall be allowed under this section to any nonresident alien.

(b)

Conforming amendments

(1)Section 6211(b)(4)(A) of such Code is amended by inserting 36C, after 36B,. (2)Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting 36C, after 36B,. (3)The table of sections for subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 36C the following new item:

Sec. 36C. Credit for taxpayers.

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2018.