Saturday, March 21, 2009

Cap-and-Trade's Regressive Tax

by Jillian Bandes
March 21, 2009

A new study released by the Tax Foundation details just how regressive the proposed cap-and-trade legislation will be on American families, a plan the Obama administration hopes to implement by the end of the year. According to the Tax Foundation, the bottom 20% of income earners would pay 6.2% of their income towards the tax, while the top 20% of income earners will pay 1.4%.

“They can talk all they want about offsets and other benefits that they plan to give the poor to make up for this new additional heavy tax burden. This is a very real and immediate tax imposed on working families, and then there is a future promise of some theoretical benefit or handout that will somehow make it all better,” said Landrith. “Con men usually make the argument better than that.”

The Tax Foundation’s report claimed that on average, the cost of Obama’s cap-and-trade scheme will cost each household $1,218, with the heaviest burden on single-parent households and those living alone. Others who would be most affected include those under 25 and over 75 years of age and those in southern states, according to Matt Moon, manager of media relations at the Tax Foundation.

Rep Pitts, (R-Penn), a member of the House Committee on Energy and Commerce, said it was obvious that cap-and-trade system would adversely affect those with low incomes.

“Everyone uses energy, but lower income people spend a higher percentage of their income on energy. These families would see prices rise on all of the products they purchase—anything that requires energy to be manufactured, grown, produced, or shipped—in short, everything,” he said.

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