WSJ Cherry-Picks Data to Label Cap-and-Trade Scheme ‘Regressive’

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Monday, March 09, 2009 at 5:07 pm

An editorial in today’s Wall Street Journal attacks President Obama’s cap-and-trade plan to curb carbon emissions as a “regressive” policy:

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%. Cap and trade is the ideal policy for every Beltway analyst who thinks the tax code is too progressive (all five of them).

Hmm, let’s take a look at this claim.

As the Journal’s editorial board points out later in the editorial, Obama’s plan calls for 80 percent of the revenue generated by selling carbon allowances to be given back to the public through a tax credit of $400 for individuals or $800 for families. If you accept the Journal’s numbers, that means the bottom quintile would gain $120 a year, while higher-income families would lose slightly (in the short term, at least, until alternative energy becomes cheaper).

Don’t believe me? Then take a look at this chart from the very same CBO report cited by the Journal:

cbo-chart

Note that although Obama’s plan calls for a tax credit, the effect is that of a lump-sum rebate, because every individual/household would receive the same amount. So the Journal’s questionable math notwithstanding, the poorest 40 percent of Americans would gain from this plan (including a substantial gain by the poorest 20 percent), the richest 40 percent would lose and the middle 20 percent would break about even.

If that’s not a progressive tax scheme, what is?

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Comments

7 Comments

immolate
Comment posted March 9, 2009 @ 10:00 pm

So what you're saying, in effect, is that Obama's cap and trade plan is not a regressive tax, but rather another fake tax “rebate” that grants people money back that they didn't pay in the first place. In other words, its another redistribution of wealth… i.e. a naked money grab by the usual looters to buy the votes of the usual looter beneficiaries.

Giving money to people that didn't earn it is evil. It isn't evil so much because you're stealing it from people who did earn it–it's evil because you're attempting to destroy all that is good and valuable in the people you give the freebies to. You take their motivation, you take their self-respect, and worst of all, you take their justification to struggle and become something better. It is the most subtle and seductive of all mass sedatives, and you gleefully advocate it as if the consequences won't destroy you as easily as everyone else.

That make you either evil or a useful idiot. I generally give people the benefit of the doubt and assume they're just being useful.


Captain’s Log: March 10, 2009 « Captain Trade
Pingback posted March 10, 2009 @ 1:01 pm

[...] Hey, WSJ: Learn some math. (Washington Independent) [...]


Broad Brush Issues « Politics or Poppycock
Pingback posted March 10, 2009 @ 6:50 pm

[...] Washington Independent: “WSJ Cherry-Picks Data to Label Cap-and-Trade Scheme ‘Regressive’” [...]


Sustainabler
Comment posted March 13, 2009 @ 10:28 am

Polluting isn't useful. And it's not good either. Destroying incentives to pollute is a good thing. Polluting is stealing from the earth, from our fellow inhabitants of the planet who rely on ecosystem services (clean air, clean water, stable climate) to survive. Problem is, for too long pollution has been “free”. CO2 from fossil fuels is pollution that wasn't in the biosphere before we burned the coal, oil, etc.

The profligate who waste carbon-fossil based energy will pay more under a carbon tax or a cap and trade with an equal per-capita rebate system. The effect of the rebate (and higher cost of carbon under the new system) will be to create incentives to conserve, among all income classes. That will be a VERY good thing! Creating internalized costs that encourage innovation, renewable energy and conservation will be a very good thing for our nation's survival and prosperity.

Obama is smart, smarter than the climate deniers and naysayer failure-advocates. The people are with him, and we'll do quite well with a flat rebate under the proposed system!


Sustainabler
Comment posted March 13, 2009 @ 5:28 pm

Polluting isn't useful. And it's not good either. Destroying incentives to pollute is a good thing. Polluting is stealing from the earth, from our fellow inhabitants of the planet who rely on ecosystem services (clean air, clean water, stable climate) to survive. Problem is, for too long pollution has been “free”. CO2 from fossil fuels is pollution that wasn't in the biosphere before we burned the coal, oil, etc.

The profligate who waste carbon-fossil based energy will pay more under a carbon tax or a cap and trade with an equal per-capita rebate system. The effect of the rebate (and higher cost of carbon under the new system) will be to create incentives to conserve, among all income classes. That will be a VERY good thing! Creating internalized costs that encourage innovation, renewable energy and conservation will be a very good thing for our nation's survival and prosperity.

Obama is smart, smarter than the climate deniers and naysayer failure-advocates. The people are with him, and we'll do quite well with a flat rebate under the proposed system!


FAIR Blog » Blog Archive » Centrism boosting at the Washington Post
Pingback posted April 13, 2009 @ 4:49 pm

[...] such a tax increase? The Wall Street Journal editorial page and leading Republicans say so, though it’s not clear that they’re right (and some of those Republican claims have been totally misleading). Broder concludes that given [...]


adidas online
Comment posted June 2, 2010 @ 6:54 am

Thanks for this interesting post,i like it.


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