Conservatively Speaking

How much would cap and trade cost you?

Posted by Mary Lazich on June 22, 2009

Taxes

Sometimes lost in the national news coverage of the federal government assuming control of yet another industry is discussion about an equally significant, if not more so story: the largest tax increase in American history, the cap-and-trade energy tax.

Under the Democrats’ cap and trade proposal, the federal government establishes a specific cap on the amount of carbon dioxide American industries can emit. In order to enforce the cap, a limited number of allowances are sold. Utilities, factories and other businesses regulated by the cap and trade law would be required to submit the appropriate number of allowances determined by the amount of carbon dioxide they emit into the atmosphere annually.

Washington obtains revenue by selling allowances to the highest bidder.  Trade transpires because allowances can be purchased and sold according to the needs of individual businesses.

Hundreds of billions of dollars in new costs will be created for American businesses. Care to guess how they will address the huge new expense? Of course, they will pass the costs onto consumers, making cap and trade a large tax on energy. Some U.S. businesses facing an increase in the cost of doing business will shut down operations and high tail it for countries with lower energy costs and without similar regulations. U.S. firms will be placed in a competitive disadvantage. The exodus of American businesses as a result of cap and trade is now referred to as a “carbon leakage.”

During March of this year, the nonpartisan, nonprofit Tax Foundation in Washington D.C. conducted a study about the costs associated with a cap and trade policy aimed at lowering greenhouse gas emissions by 15 percent. The annual burden on American households would be $144.8 billion. The average annual household burden would be $1,218, approximately 2% of the average household income.

What kind of financial burden would cap and trade impose on your household? The Tax Foundation has devised the Household Cap-and-Trade Burden Calculator. Calculate the cost of cap and trade to your household here. 

I have signed the No Climate Tax Pledge that shows my opposition to any effort to include cap and trade, a huge tax increase, in climate control legislation.