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Obama carbon tax can be passed on to consumers
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The Obama administration's carbon tax program is an incentive to reduce greenhouse gases (GHG's). It imposes a direct fee on fuels based on the amount of GHG's they emit, but does not set a limit on the amount of emissions.
Carbon tax effects businesses and consumers
The tax is imposed on the sale of fuel, from "upstream" producers, such as coal mines or natural gas or oil wells. The cost of the carbon tax can then be passed "downstream" to consumers from electric utilities, oil and gas refineries, and fuel transporters. Ultimately business and consumers pay for carbon-intensive good and services.
The impact on businesses depends on how much fossil fuel-based energy it uses. The higher the energy usage, the more users will be effected. Lower-income consumers pay a higher percentage of their income for such things as electricity and gasoline.
Difference between carbon tax and cap-and-trade
The fundamental difference between the carbon trade and cap-and-trade is how they establish prices and reduce emissions.
A carbon tax imposes a direct fee (the carbon price) on fuels based on the amount of GHG's they emit but does not set a limit on them.
Cap-and-trade establishes a limit, or "cap," on GHG emissions, but the price for emission allowances (the carbon price) is determined by the supply and demand for allowances in the emission trading market.
Obama carbon tax and cap-and-trade opponents
The opposition to Obama's carbon tax-and-trade programs is being resisted by organizations such as the U.S. Chamber of Commerce. The main reason is what the cost would be to businesses although it is an accepted fact that it would be passed on to consumers. The Chamber feels that it is a very expensive tax used to transfer wealth.
It is expected that there will be months of negotiations but that eventually Obama is expected to have the programs in place during his first term in office.
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