Taxing All Americans Through Cap and Trade

President Obama and his eco-nuts would rather you didn't pay attention to what they have in store for your wallets and pocketbooks.

They're fully intent on imposing a massive new and unneeded taxing scheme called cap and trade.

What will that mean? You know those vaunted claims that Obama will not raise taxes on 95% of all Americans? It's utter nonsense. I'd use stronger language than that, but this is a PG blog.

Hit hardest would be the "95% of working families" Mr. Obama keeps mentioning, usually omitting that his no-new-taxes pledge comes with the caveat "unless you use energy." Putting a price on carbon is regressive by definition because poor and middle-income households spend more of their paychecks on things like gas to drive to work, groceries or home heating.

The Congressional Budget Office -- Mr. Orszag's former roost -- estimates that the price hikes from a 15% cut in emissions would cost the average household in the bottom-income quintile about 3.3% of its after-tax income every year. That's about $680, not including the costs of reduced employment and output. The three middle quintiles would see their paychecks cut between $880 and $1,500, or 2.9% to 2.7% of income. The rich would pay 1.7%. Cap and trade is the ideal policy for every Beltway analyst who thinks the tax code is too progressive (all five of them).

But the greatest inequities are geographic and would be imposed on the parts of the U.S. that rely most on manufacturing or fossil fuels -- particularly coal, which generates most power in the Midwest, Southern and Plains states. It's no coincidence that the liberals most invested in cap and trade -- Barbara Boxer, Henry Waxman, Ed Markey -- come from California or the Northeast.

Coal provides more than half of U.S. electricity, and 25 states get more than 50% of their electricity from conventional coal-fired generation. In Ohio, it totals 86%, according to the Energy Information Administration. Ratepayers in Indiana (94%), Missouri (85%), New Mexico (80%), Pennsylvania (56%), West Virginia (98%) and Wyoming (95%) are going to get soaked.

Another way to think about it is in terms of per capita greenhouse-gas emissions. California is the No. 2 carbon emitter in the country but also has a large economy and population. So the average Californian only had a carbon footprint of about 12 tons of CO2-equivalent in 2005, according to the World Resource Institute's Climate Analysis Indicators, which integrates all government data. The situation is very different in Wyoming and North Dakota -- paging Senators Mike Enzi and Kent Conrad -- where every person was responsible for 154 and 95 tons, respectively. See the nearby chart for cap and trade's biggest state winners and losers.

Any tax on a producer will be passed on to the end consumer. It's basic economics, and yet the Administration and an incurious media either ignore this, or choose to omit this salient fact when discussing their grandiose plans for reworking the economy.

Never mind that raising taxes into the teeth of a recession is destructive and slows any recovery, but this plan will also hit people in the lowest income tax brackets hardest. You read that right too. Those in the lowest brackets will use a larger percentage of their income to cover the higher costs imposed by cap and trade than those in higher tax brackets.

This is voodoo economics, and the intent to fundamentally alter the US economy will have disastrous results. And yet, that appears to be the Administration's goal.

UPDATE:
Hot Air has much more. Ameripundit also weighs in.