President Obama's proposal for a carbon cap-and-trade program tries to defray the cost it puts on middle and lower-class Americans by channelling $60 billion of the money raised by selling carbon permits towards various tax credits and subsidies. But businesses of all stripes emitting carbon will shoulder the burden of the cap. Irwin Stelzer explains in the DC Examiner that this means inescably higher energy costs for consumers--not made up by the $60 billion handout:
The fourth problem is that Obama has promised that no family earning less than $250,000 per year will pay one dime in higher taxes. But the companies that have to pay for permits will pass that cost on to consumers in the form of higher prices for electricity and other products. So these families will pay $645 billion, only some of which will be returned in the form of lower income taxes, for a system that is terribly inefficient.
Cap-and-trade is a strange kind of tax in that for some reason we've decided not to call it a tax.
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