Many policymakers portray a cap-and-trade system as a way to curb greenhouse gas emissions without burdensome taxes. However, the financial burden of such a system would be passed on to consumers, not simply borne by energy companies.
A new Tax Foundation calculator now shows how much a U.S. cap-and-trade system would cost individual households annually.
Although carbon emission permits under a cap-and-trade system would be purchased first by energy companies, the costs are ultimately paid by American consumers. The calculator asks how much a household's combined monthly income is (pre-tax) and how much a household spends monthly on various items like electricity, natural gas, food, clothing and transportation. It then calculates the total annual additional cost that cap-and-trade would impose on that household as well as the cap-and-trade burden as a percentage of income.
The mission of the Tax Foundation is to educate taxpayers about sound tax policy and the size of the tax burden borne by Americans at all levels of government. From its founding in 1937, the Tax Foundation has been grounded in the belief that the dissemination of basic information about government finance is the foundation of sound policy in a free society.