Though it is masked as a measure to save the Earth from Anthropogenic Global Warming (which is equivalent to saving the Earth from equally non-existent Martians) President Obama’s largest tax increase, his Carbon Cap-and-Trade Tax is aimed squarely at those who can least afford it. But what else should we expect from an administration which subordinates economics to ideology on every single issue? So, how did the President set out to tax the poor, and middle class, to destruction? By placing a huge tax on those nasty coal and oil companies. Like all taxes on production, these taxes will be passed on to consumers. Even Obama’s spokemen agree on that, claiming the taxes will create an incentive to conserve. But those costs do not fall evenly on the public, they are, in fact, very regressive.
- The portion of the poor and middle class’s incomes spent on energy are higher than that of the wealthy. Congressional Budget Office figures place the cost of these embedded Carbon Taxes at 3.3% of income for the bottom fifth of the income scale, 2.8% for the middle fifth, but only 1.7% for the wealthiest fifth. Further, the wealthiest quintile will suffer less hardship from a less-than-2% loss in their income than the poor and middle class, who in hard times are barely making it to begin with, can bear a 3% loss.
- If these taxes do create incentives to conserve are not equally available. While those in the upper income levels have the option of replacing an inefficient automobile with a hybrid, electric or CNG fuel saver, those who are living closer to the margin must fully utilize their current vehicles before replacing them and when they do, they will likely purchase the deeply discounted, cast off gas guzzlers those wealthier have abandoned. You can buy a used SUV for half what they cost a year ago already.
- The lifestyle changes required by these costs also fall unequally. The cost of fuel, for example, is a far smaller share of the total cost of ownership for a yacht than for a middle class bass boat. The wealthy will be less inhibited in their use of that fuel while those costs may well leave the less affluent staying home more often.
- Finally, there are costs that are not directly related to the carbon tax. College professors, lawyers and bureaucrats will not be losing their jobs due to higher energy costs, but machinists ans assembly line workers will certainly be displaced by their counterparts in China, India and Indonesia where such foolish burdens are not placed on industry.
Yet, blinded by envy and the abysmal education Americans receive in economics, those most heavily burdened by this new tax will continue to worship their idol until our economy totally collapses under the weight of his ideology.
Ignorance is indeed expensive.