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Obama’s $80 Billion-a-Year Hidden Tax
05.23.09

Cap-and-trade tax plan will cost families an extra $1,600 a year

by Penny Wise
 
Candidate Barack Obama promised not to raise taxes on those making less than $250,000 a year, but he rarely mentioned that if elected president he would effectively tax all Americans by supporting a carbon emission cap-and-trade tax program that would increase the price of gasoline by 74%, natural gas by 55%, and electricity by 90%.
 
 
Peter Orszag, who is now director of President Obama’s Office of Management and Budget, agreed with his future boss in testimony as the Director of the Congressional Budget Office in an April 2008 hearing. Orszag testified that “Under a cap-and-trade program, firms would not ultimately bear most of the costs of the allowances but instead would pass them along to their customers in the form of higher prices.”
 
President Obama may not call this a tax, but investor Warren Buffett calls this a tax “like anything else.” Speaking on CNBC, Buffett said, “Anything you put in that effectively taxes carbon emissions is--somebody's going to bear the brunt of it. In the case of a regulated utility, the utility customers are going to pay for it.”
 
The Congressional Budget Office estimates that President Obama’s cap-and-trade tax would cost consumers a minimum of $80 billion a year, or about $1,600 a year for the average family of four. That is the single largest tax increase President Obama has proposed since taking office. And the impact of this tax on lower-income Americans, those whom candidate Obama promised would not see any tax increases, would be greater. They typically devote more of their incomes to energy-intensive purchases and will see no corresponding tax decreases because this tax is passed from energy suppliers to consumers.
 
If that is not enough, President Obama has backed away from auctioning all the emissions permits to auctioning some permits and giving the rest away to energy producers for free. While the government would collect less for the permits from energy producers, consumers would still pay more for energy because the permits that the Obama administration gives away would establish emissions caps that would push energy prices higher.
 
President Obama acknowledged this in Iowa, saying, “Over time, as the cap on greenhouse gases is lowered, the commodity becomes scarcer -- and the price goes up.  And year by year, companies and consumers would have greater incentive to invest in clean energy and energy efficiency as the price of the status quo became more expensive.”
The president’s cap-and-trade proposal is a $80 billion-a-year hidden tax aimed directly at the Americans the president promised to protect from any tax increases. His plan favors high-income Americans at the expense of the poor and working class.
And all of this ignores the impact that a $1,600 per year tax increase on a family of four will have on an already very fragile economy.
 
 

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