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Who Pays the Carbon Tax?

October 18, 2016

At first blush, it’s the corporation, i.e, the utility generating electricity, the refinery producing gasoline, the natural gas driller, the car manufacturer, or whichever corporation is legally responsible for paying the carbon tax.

The Energy Information Administration (EIA) for example, in its determination of levelized cost of electricity (LCOEs), adds a $15 charge for a carbon tax on electricity from coal-fire power plants. A $15 carbon tax increases the levelized cost of electricity, from coal-fired power plants, from 6 cents to 9.5 cents per kWh.

But who actually pays the tax?


Corporations are currently taxed at a high rate. To pay the tax, corporations add the cost of the tax to their products or services.

States add sales taxes for many products and services. For example, every state has a sales tax on gasoline.

In effect, all taxes paid for by corporations are hidden taxes. They are hidden from the consumer because they are included in the price of the product.

Sales taxes, at least, are itemized at the point of sale.

The correct answer to the initial question?

Ordinary people pay for all taxes, including those hidden in the price of products people purchase, where corporations are the involuntary collector of taxes for the government.

This would include any carbon tax that the government might impose.

Corporations are involuntary tax collectors, and would be collecting more taxes if a carbon tax is added to the list of taxes.

When corporate taxes are increased, which would be the case with a carbon tax, the prices of their products are increased.

Higher prices affect the middle class and lower-income groups who use a higher percentage of their income to purchase goods and services than do wealthy individuals.

Lower and middle-income earners are hurt the most when corporate taxes, including any carbon tax, are increased.

The people proposing a carbon tax admit this, because they also propose to redistribute some of the carbon tax, once the government collects it, to low-income people.

In that sense, a carbon tax is merely another method for wealth redistribution.

A carbon tax merely adds to the slush fund that politicians can dole out to their favored communities.

All taxes, corporate, sales and personal, are paid for by consumers, and this includes the carbon tax.

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12 Comments leave one →
  1. October 18, 2016 9:40 am

    With all the hidden taxes We the people are being treated as the frog in a pot of cold water and they are turning up the heat . I believe that this is the real aim behind the global warming scam .

    • October 18, 2016 9:57 am

      The real reason is as stated by the head of the UNFCC and others: It’s to change the economic system from capitalism to socialism.

  2. Art Fonden permalink
    October 18, 2016 10:39 am

    Good post !

    I think the economic and health damages these tax and levee policies have done to Europe and the UK needs to be studied by our politicians ..they (EU and UK) instituted these charges in the 1990s.

    Reported increases in energy poverty to 18% UK ,and 17% German population .

    UK hit worst, Gal gas for transport 80% tax , 70% Diesel . 25% tax on fuel for heat .(including vat .. Food more expensive with increased transport, preservation cost . heat and light as well ..

    My research of UK govt reports show excess winter deaths, which had declined for fifty years , end decline mid 1990s , began a marked increase after as cost of fuel increased .

    Excess winter deaths in the tens of thousands attributed to energy poverty since 2000.

    We in the US have 200 million in latitudes where winter temps can be lethal ..this must be covered and prevented here .

  3. William permalink
    October 18, 2016 11:16 am

    There are fundamental issues with the assessment and collection of Carbon Taxes that should not be ignored by the taxpayers in the US. First, who assesses the quantity? There are numerous concerns with how Carbon releases is measured, estimated, or forecast even after a decade of carbon accounting sciences development. In August, the entire life cycle analysis science applied by of biofuels was debunked. Billions wasted on the false promise of GHG reductions over the past decade. Second, who collects the taxes. Again, for example, the biofuel debacle over the past six years shows that EPA and IRS did not provide any semblence of oversight to protect billions of dollars. What are the taxes to be used for? Do we give taxpayers a refund on the programs that have failed them in the past? Certainly, we should not invest taxpayer money into matured energy programs such as Solar, Wind, Efficiency, Clean Coal, Carbon Capture. These are mature markets that should rely on investors and shareholders for money, not Joe Sixpack.

  4. Neil Jones permalink
    October 18, 2016 12:30 pm


    Well said.

    Neil Jones

  5. Don Shaw permalink
    October 21, 2016 8:58 am

    Great article, thanks.
    I have only one point to add. One other objective of the carbon tax is to make green energy look more competitive. If the carbon taxes were raised to high enough levels, the economy would more quickly switch to much more expensive alternative fuels. In fact some or all of the revenues will be used to further subsidize expensive and unreliable alternative fuels. Of course the burden of increased energy cost will fall on the average “joe” while the Washington elites live on our dime.
    With a totally complicit media the Politicians will blame the rich “guys” yet again.

    • October 21, 2016 9:08 am

      Thanks. Excellent point. A carbon tax inflates the cost of natural gas and coal-fired power, creating an artificial cost structure where wind and solar look less expensive.


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