Economics – tax the producer and they pass it to consumer

No kidding? If you’ve had anything to do with a small or large business, you know that taxes are generally passed on to consumers. Do you really think that Big Oil would have pulled some cash off the tree to pay for candidate Obama’s windfall profit tax?

We’ve heard much about possible cap and trade taxes throughout the blogosphere the past few weeks, but we have not discussed here. Remember, Obama promised 95 percent of Americans would not see a tax increase. The cap and trade legislation would ensure that 100 percent of Americans will get slammed by this type of forward thinking environmental wacko cow excrement.

Obama proposes – on the Energy and Environment section of – a cap and trade program “to reduce greenhouse gas emissions 80 percent by 2050.”

George Will summed up the proposal quite nicely last year.

… “cap-and-trade” comes cloaked in reassuring rhetoric about the government merely creating a market, but government actually would create a scarcity so government could sell what it has made scarce. The Wall Street Journal underestimates cap-and-trade’s perniciousness when it says the scheme would create a new right (“allowances”) to produce carbon dioxide and would put a price on the right. Actually, because freedom is the silence of the law, that right has always existed in the absence of prohibitions. With cap-and-trade, government would create a right for itself — an extraordinarily lucrative right to ration Americans’ exercise of their traditional rights.

So, some politicians want to create a commodity that currently does not exist, for which use would be mandated by law so they can regulate it. Once regulated, they can artificially create a scarcity of carbon emission credits – at will – to ensure the economy and the free markets crumble under the weight.

Yes, companies (producers) – who are struggling financially right now – would pass on those taxes to you (consumers) who uses any sort of energy. Gasoline, heating oil and electricity would all be targeted. 100 percent of Americans would be hit be indirect tax increases. Do not be fooled.

I’ve been reading Basic Economics by Thomas Sowell and figured that liberals in Washington simply did not understand Economics 101, but I think I’m totally wrong. They understand it and are using the American people’s lack of knowledge to promote their agenda.

Morrissey over at HotAir has been covering, and leads us to today’s Wall Street Journal piece.

Politicians love cap and trade because they can claim to be taxing “polluters,” not workers. Hardly. Once the government creates a scarce new commodity — in this case the right to emit carbon — and then mandates that businesses buy it, the costs would inevitably be passed on to all consumers in the form of higher prices. Stating the obvious, Peter Orszag — now Mr. Obama’s budget director — told Congress last year that “Those price increases are essential to the success of a cap-and-trade program.”

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%.

And don’t forget this rubbish spouted by Rahm Emanuel, courtesy the Washington Times from March 1, with a hat tip to Gateway Pundit

Mr. Emanuel said energy costs are too low anyway. U.S. car companies have relied too long on gas-guzzling autos and failed to invest in alternative energy vehicles, he said, and contended that the time for new auto fuels is now.

“They never invested in both alternative energy cars. They got dependent on big gas guzzlers. They didn’t do — they have a health-care cost structure that’s outdated,” Mr. Emanuel said, repeating the administration’s premise that health costs must come under control or else risk breaking all other pieces of the budget.

They got dependent? Sweet goodness Rahm, they were selling – and continue to sell – cars, trucks and SUVs because that is what the people wanted.

And remember back in January 2008 when Obama said that cap and trade would cause energy prices to skyrocket? He was personally fine with higher costs passed on to consumers. These are not just higher costs, they are higher costs as a direct result of tax increases.

Back to Gateway Pundit, with an Obama quote from Jan. 17.

“Under my plan of a cap and trade system electricity rates would necessarily skyrocket. Businesses would have to retrofit their operations. That will cost money. They will pass that cost onto consumers.”


Flickr photo used on the home page by Mornby.

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Steve McGough

Steve's a part-time conservative blogger. Steve grew up in Connecticut and has lived in Washington, D.C. and the Bahamas. He resides in Connecticut, where he’s comfortable six months of the year.


  1. Dimsdale on March 9, 2009 at 10:08 am

    It seems that the Democrats have seen the light on trickle down economics.  The trickle down tax version anyway….

  2. Wyndeward on March 9, 2009 at 4:38 pm

    Political alchemy — take a nearly worthless common element and make it valuable through legislation.

    This is going to end badly…

  3. libertarian27 on March 10, 2009 at 1:32 am

    This is GPS taxation. Every time you make a move – you are taxed.

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