Green Poverty

How the latest proposal for a green tax would actually work:

The United States economy currently uses about 2.3 trillion kilograms of carbon per year, comprising 1 trillion kg in its coal, 0.8 trillion kg in its oil, and 0.5 trillion kg in its natural gas. Taxing this at Frank’s recommended rate of $1.21 per kg would therefore raise $2.78 trillion, somewhat more than the $2.3 trillion that the federal government raises through the current tax system (assuming that the carbon tax did not crash the economy, which it probably would, but we’ll leave that aside for now).

But what would the effect on prices be? Currently, western bituminous low-sulfur coal has a cost of $0.01 per kg at the mine, or $0.03 delivered to most users. Coal is about 90 percent carbon by weight. The green tax would thus multiply the cost of coal by nearly a factor of 40. A thousand cubic feet of natural gas contains about 18 kg of carbon. Taxing its carbon at a rate of $1.21 per kg would thus increase the price of a thousand cubic feet of natural gas from its current level of $2.50 to about $24.30, a tenfold increase. A barrel of oil contains about 110 kg of carbon. The green tax would thus hike the price Americans pay for oil by $133 per barrel over the world price (i.e., to about $230 per barrel today). As coal and natural gas provide the energy to produce not only the bulk of the nation’s electric power, but also most of its steel, aluminum, fertilizer, pesticides, food, plastics, electronics, glass, and many other products, and as oil provides the fuel to transport them, the cost of all of these would soar as well.

So who ends up paying? Under America’s current tax system, the top 5 percent of income earners pay 59 percent of all federal income taxes, the next 45 percent pay 39 percent, and the bottom half pays next to nothing. But because basic commodities such as food, electricity, and fuel are bought in similar amounts per capita regardless of income (i.e., a working-class family living on $30,000 per year in Harlem uses about the same amount of electricity and food as the family of a money manager living on $30 million per year on Park Avenue; and rural Americans, of whatever class, spend much more on gasoline than either), the $2.78 trillion green tax would be spread nearly evenly on all Americans, not as a fixed “flat tax” percentage of income, but as a fixed cost regardless of income.

Divided evenly among 300 million Americans, the green tax works out to a burden of $9,270 imposed on every man, woman, and child. While this would be a pittance for the most affluent Americans, it would take away 40 percent of the total income of a family of four supported by two wage earners making the average U.S. salary of $45,000 each, and it would be a virtually fatal burden for the poor.

In other words, the wealthy liberals who support such ideas would be hurt the least. Isn't that something that liberals should be upset about?