The Cruelest Tax Of All

Guest Post by Willis Eschenbach

A “progressive” tax is one where the wealthier you are the higher percentage of tax you pay. On the other hand, I’ve said before that a tax on energy, the so-called “carbon tax”, is one of the most regressive taxes available. It is the reverse of progressive, it hits the poor the hardest. This is because poor people spend a larger percentage of their income on energy than do rich people.

Someone challenged me on this claim about energy taxes the other day, and I realized I believed it without ever checking it … bad Willis, no cookies. So of course, having had that thought I had to take a look.

The Energy Information Agency (EIA) collects data on this, with the exception of gasoline usage. I got the most recent data, for 2009. (Excel workbook). Gasoline usage figures are here from the Bureau of Labor Statistics. Finally, income averages by tiers are available here from the Census Bureau.

Putting all those data sources together, here are the expenditures on energy as a percentage of the average income.

percentage-income-spent-on-energy

As always, data brings surprises. I didn’t expect the main expense to be heating (water and space heating) and the smallest to be gasoline.

In any case, it is quite clear that my original intuition was correct. The wealthiest of our households spend about 6% of their income on energy, while the poorest spend just over 40% of their income on energy.

And of course, this means if energy costs go up by say 25%, the rich will get a bite out of their income of 1.5%. But the poor will get an additional bill for no less than 10% of their income …

Sadly, in reality it is worse than that. At the poor end of the spectrum, there is very little slack in the budget. There is a concept in economics called “disposable income”, money that you have at the end of the month that isn’t already spoken for to pay some bill or other.

People living on the economic bottom floor not only don’t have disposable income, they never heard of disposable income. Every dollar is spoken for, and often over-promised.

So the poor get it from both ends. Not only does any price increase bite the poor harder than it does the wealthy, but the poor have much less available money to pay for any increase. That means the energy price increase has to come out of their kids food or the doctor bills or somewhere else important … bad news.

The rich pay a percent and a quarter, and the poor pay ten percent? This is the action that will save the planet in fifty years, to shaft the poor with an incredibly regressive tax?

I say again: fight CO2 if you wish, but fighting it by increasing the price of energy harms the poor more than anyone. Look at the graph above. Energy taxes are wildly regressive, and the worse off a family is, the harder any such “carbon tax” or any energy tax will hit them.

Best to all,

w.

PLEASE, if you comment QUOTE THE EXACT WORDS YOU ARE DISCUSSING, so we can all be clear about your subject.

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254 thoughts on “The Cruelest Tax Of All

  1. “People living on the economic bottom floor not only don’t have disposable income, they never heard of disposable income. Every dollar is spoken for, and often over-promised.

    So the poor get it from both ends. Not only does any price increase bite the poor harder than it does the wealthy, but the poor have much less available money to pay for any increase. That means the energy price increase has to come out of their kids food or the doctor bills or somewhere else important … bad news.”

    Not to mention that many of the goods (and probably services) that they must pay for will also increase because the providers will be paying more for their own energy bills.

    Good Willis. Treat yourself to a cookie.

    • There is an economic term for everything that happens at the economic floor. It is called Bottom Of Pyramid. Such markets are mass production based, as only the lowest price per unit meets the requirements. Every cent on top of that leads to Suppressed Demand. Energy is by all means a BOP market, and any elitistic taxation leads to energy poverty expressed as suppressed demand.
      BOP and elitism are mutually exclusive.

    • Energy is not the only thing that gets inflated in cost.

      Take “tipping” (except cow tipping ). When I came to the USA, a 10% tip was considered a jolly good tip. Well its the same as tithing, so what could be fairer than that.

      But as food prices have risen; for some reason the tipping percentage is required to rise as well.

      So for Christmas dinner, my family went to a local Italian restaurant which has a good reputation. And the food was great and the service.
      It was so good, that I thought I would leave a 15% tip; a very rare thing to do.

      I was just about to add that amount to the already quite expensive tab, when I noticed an item more than double any item we had ordered for dinner.

      A “gratuity” !

      What the hell do you mean “gratuity” ?? Nobody asked me about any gratuity.

      The restaurant just added !8% to my bill without even asking me.

      So as a result, I didn’t leave ANY tip.

      The food and the service were excellent. But we will never go to that place again.

      I still think that a tithe sized 10% tip is plenty.

      G

      • I try to tip cows at least 20%. Anything less just results in a quick stumble. Over 25 and you’re certain to get a confirmed rollover with legs in the air and a full moo-y bellow.

  2. There are no good taxes. Some are less bad than others. The least worst are those that paying is a matter of choice. This means that taxes on tobacco, alcohol, heroin, cocaine, ICE, and ‘entertainment’ would be the only ones approaching “not too bad” taxes.

    • I can do you one better. Tax pets, because they are optional. Tax cars, optional. Use a horse instead, oops, taxing pets.
      Tax permanent housing, you can live in a tent. Tax food, because so many people are obese.

      You call it “not too bad” taxes, because optional. I see you attempting to tax anything your neighbor does that you do not like. In a free, open society, where Pursuit of Liberty is enshrined in the nation’s Founding Document, the use of the tax code to control and manipulate people is pure evil and tyrannical.

      A “good” tax must be as broad based as possible. Everybody must understand that what government does must be paid for.

      • Gareth Phillips January 22, 2017 at 1:18 am Edit

        Somalia is an exciting country where they have shown what can be achieved without anyone paying taxes.

        Yes, it’s fantastic there, that’s why they are reintroducing taxes. PS—the reason they didn’t have taxes was internal fighting and civil war …

        w.

      • @ Gareth Phillips:
        Hong Kong is an exciting place where they have shown what can be achieved with taxes kept low, broad based, and predictable.

      • Agreed, TonyL. Taxes should be applied in equal amounts or equal rates. Government has no charter to treat people differently under the law.

      • For the poor elderly, the only thing they live for is their pet. Don’t tax guard dogs or service dogs or companion dogs for vets with PTSD.

        Rather tax marble countertops, giant stainless steel refrigerators, king sized beds, a third garage, and above all, interest paid on municipal bonds (loans to municipalities). The truly rich don’t pay any taxes because they invest everything in loans to cities, income from which is tax-free.

        As for electricity, many countries have a very low rate for the first nnn kWh with much more after that. This ensures the survival of everyone, but the system gets paid for. In South Africa the first 50 kWh are free. In Kyrgyzstan the first 700 are very cheap (about 1.5 US cents each). In Ulaanbaatar it is free in the middle of the night to poor homes (who can now use high thermal mass storage heaters).

        It takes a little thought, but there are ways to prevent the misery of the poor and close the income gap without being onerous.

      • I think horses are often legally treated as livestock, not pets.

        But pets are “taxed.” I pay annual county registration fees for mine. Cars are taxed. They have state sales taxes and an annual registration that in most counties and states is based on the value of the vehicle. If you buy your car in one state and register it in another with a lower sales tax rate, the registering state will often force you to pay to cover the difference. Permanent housing is taxed. People pay property taxes annually, and properties with permanent housing on them are taxed at a higher value than those without.

      • ‘The truly rich don’t pay any taxes because they invest everything in loans to cities, income from which is tax-free.’

        Rilly?

      • But it should hit everyone equally hard not the poorest hardest by your logic so the really rich should pay an astronomic level of taxation for them to feel the same way about how much taxation hurts.

      • Gareth. So the only difference between the US and Somalia is that we have taxes and they don’t?

        Sheesh, what is it about you liberals and making really bad analogies?

      • Crispin, I love how so many people want the government to tax the stuff that they don’t use.
        PS: The biggest investors in municipal bonds are retirement funds and 401K’s, not the wealthy. They usually are savy enough to figure out investments with a much better rate of return.

      • Another point is that the only way to change the wage gap is to teach the poor how not to be poor.
        The vast majority of people who are poor, are poor because of bad decisions that they have made. It wasn’t imposed on them by outsiders.
        Until the poor stop doing the things that made them poor, no amount of outside support will make them not poor.
        If all the world’s wealth were to be confiscated and distributed evenly, within 20 years, the people who are wealthy now, will be wealthy again, and those who are poor now will be poor again.

    • Well in the US Constitution, Article I Section 8, Clause number one, it says that the Congress is allowed to lay and collect taxes to pay the debt, and for the common defense and welfare OF THE UNITED STATES . (NOT tom, dick and harry).

      Unfortunately, the Constitution does NOT limit what they can spend money on; only what they can tax for (National defense).

      So they run a tab on the credit card; it’s called “The full faith and credit of the United States of America”

      Then they say; “we are allowed to tax to pay for the debt.”

      Sneaky B******* !!

      The only good tax, is for the defense budget.

      G

  3. Not bad Willis, just dumb Willis.

    Heating or cooling a home, running lights and various appliances costs the same whether you are rich or poor – so of course a similar cost is a smaller % of a larger income. Sheesh …

    Why do you bother ?

    • Because that’s what curious people do. They test their hypotheses and on a good day they even look for data or experiments that destroy their hypotheses. Anything less is just intellectual laziness.
      Besides, it’s not a given that Gore spends a lower percentage of his income than me on energy. He has to heat ten times as much floor space as I do, and all the jet-A fuel he needs for his commutes can’t be cheap!

    • He bothers because someone challenged him on his facts and, being a good scholar, he checked those facts.

      The first principle is that you must not fool yourself – and you are the easiest person to fool. Richard Feynman

      Just because something seems obvious or just because it should be true in principle, doesn’t mean that it is actually true. That one realization is what separates the CAGW alarmists from real scholars.

      • I certainly didn’t know the proportions before this post. Willis’ graph should be used in every debate on carbon taxes, along with his wording below:

        As Willis says: “So the poor get it from both ends. Not only does any price increase bite the poor harder than it does the wealthy, but the poor have much less available money to pay for any increase. That means the energy price increase has to come out of their kids food or the doctor bills or somewhere else important … bad news.

        The rich pay a percent and a quarter [more], and the poor pay ten percent [more]?”

        What better argument is there against carbon taxes?

    • Rich people can heat and eat and every other daily expense associated with the cost of living. Poor people have a choice, heat OR eat Or pay rent OR buy clothes OR…and so on. I very much doubt you have been faced with that choice even ignoring the impact of taxes.

      • Or turn the thermostat down. Or buy second hand or quit smoking. Read an article where a mom was whining because her food stamps had been cut and she might not be able to afford kiwis for her kid. Wah blanking wah, I thought, I don’t buy kiwis for my kids because they are expensive. And, I make good money. Why should she be able to afford that when those who pay the tab can’t. Most poor are there because of poor choices. And, yes I have been very poor. (for US standards which is not poor by most world standards)

      • Most families with incomes under $40,000 in the USA pay nothing at all – they are on welfare and other forms of assistance including heating and housing. So let’s be careful about who we are defining as “poor” when many of the USA “poor” live like royalty (they produce nothing and rely on others to bring them everything they need) compared to actual starving poor in the 3rd world being denied the path of increasing their wealth via cheap energy like the path we took over the last ~150 years.

      • ironargonaut — your response is pretty ignorant. Yes, there are always anecdotal cases of welfare abuse, but those are not the norm. A choice between kiwis and less expensive fruit is not a choice considered by most on welfare.

        Without a doubt, one of the great failures of modern America is the complete lack of empathy for anyone in different circumstances. This is true for liberals (who want to tax carbon) and conservatives (who think those on welfare should just die already.) We’ve lost all capability to understand that {gasp!} people can do nothing wrong, yet still fail at society.

        This is nothing new. The panic of 1873 was caused by banks who invested in the internet stocks of the day (western railroads). When the cash ran out, the failure lead to 20% unemployment almost overnight. People walked hundreds of miles from town to town on the rumor of work (this is where the tramp-class was developed.) By 1877, sixteen states had outlawed some or all soup kitchens because “they encouraged laziness.” As though walking hundreds of miles to find work was lazy.

        … giving benefits to the unemployed stimulates the economy, particularly when the economy is already in the $h1tter. It’s pretty straightforward: if you give money to people who are on the verge of total destitution, they’re going to end up spending it immediately, because they’re probably way behind on rent, bills, and the food necessary to chase off the relentless specter of fatal starvation. That money goes right back into the private sector. Sometimes within minutes.

        This is to contrast with tax breaks to the wealthy who simply use their breaks to add height in their penis comparing wad of bank notes.

        http://www.cracked.com/personal-experiences-1526-5-surprising-insider-facts-about-welfare.html

        By the way, Cracked has the best writing on welfare and poverty. http://www.cracked.com/blog/4-things-politicians-will-never-understand-about-poor-people/

        And I realize that shoving all of the numbers we’ve cited right into their faces would do nothing — all of this data is available to them, at any time. All of it would bounce right off their skulls because of that one time they heard about a guy on welfare who had an iPhone and a big-screen TV, and one time they read an email forward about a guy who gave money to a beggar only to see that beggar later driving a Cadillac. And d%$#!t, they think, that has to be the way it is, because otherwise it means that well-meaning people can bust their f&@#!g asses every day and still fall through the cracks. And that can’t be possible, can it? “Quick! Find me a picture of a poor person buying lobster with food stamps so I can reassure myself the system works!”

      • “Most families with incomes under $40,000 in the USA pay nothing at all – they are on welfare and other forms of assistance including heating and housing.”

        Original Mike, you may be right in the ‘rich’ counties that voted Democratic, but over half the families in West Virginia live on less than $42,000 a year, and in our county the median family income is only $28,000 a year. I would seriously doubt that half the families in our county are on assistance.

      • ‘anecdotal cases of welfare abuse’

        All welfare is abuse. Government taking money from one person and giving to another. Pure evil.

      • All welfare is abuse. Government taking money from one person and giving to another. Pure evil.

        Welfare for the rich is evil. Welfare for the poor is compassion and necessary for an efficient capitalist economy.

      • lorcanbonda January 23, 2017 at 4:33 am

        Welfare for the poor is compassion and necessary for an efficient capitalist economy.

        Compassion comes from people, not the government.
        In a free society, it is not the government’s responsibility to take care of those in need.
        That responsibility belongs to me and every other person capable of assisting.

        As welfare artificially redistributes wealth (very inefficiently, at best), it can only make a capitalist economy less efficient.

      • Irocanbonda your response is pretty ignorant. First, you complain of me using an anecdote then set it up as a strawman as if I am saying all welfare is abuse. I never claimed it was abuse. If she legally got the food stamps and legally paid for the kiwi that is not abuse, the money is for buying food she bought food. Obliviously she had enough money to buy the necessities and splurge on kiwis. I have known people when they had physical food stamps to price the purchase just right to maximize change so they could use the cash to buy cigarettes, that’s abuse. Second, it was part of a larger article where a large group of people wanted to make food stamps accepted at farmers markets so they could pay for the higher prices at the farmers market. So, it wasn’t a single case. Third, you then tell an anecdotal story of people walking hundreds of miles to find work in 1873, my examples was from a few years ago you had to go back 144 years to find an example. So, little has changed since then like say the automobile, the electric light bulb, unions, anti-monopoly laws, suffrage. Obviously, people were generous back then, how else could a starving person walk hundreds of miles. Which by the way wasn’t that uncommon since many of the settlers walked most of the way from the east coast to the west coast. Remember no automobiles! Talk about ignorant using an anecdote to show how anecdotes are wrong. Fourth, you are so ignorant you don’t even realize you are arguing both sides. You argue gov’t should have the power to take other peoples labor based on their abilities and give to others based on their wants, without realizing a gov’t that has that power also has the power to shut down the soup kitchens. Like they tried in Portland, OR when the hipster neighbors started moving into the new trendy neighborhood, then complained about the poor getting fed at the church. Fifth, you are so ignorant you think you can judge a person’s empathy from a single comment. Stuff happens we all get that. Which is why there are many people and organizations that are willing to give a hand up to those people, Why aren’t there more? Hmmm…maybe because gov’t is taking so much from so many that they are losing their ability to give. Americans are the most generous in the world period. You need to understand the difference between empathy and being a sucker. I’ve helped many and asked nothing in return. I like the feeling. The feeling I don’t like is when you have the gov’t take my labor and at the point of a gun and then you decide when and where and whom to give it to. Charities are much better at this then gov’t. I’ve dispatched in a small town had people who chose to hitch hike across the country get upset because I wouldn’t find them a bed to sleep in and the closest shelter was a 90 miles away across a mountain pass. There was one room for those in need run by a charity and they wouldn’t give it out to people who chose to hike across the country. When, a polite man came in because his wife was in the hospital seeing if there was a place for him to stay, I made arraignments w/a local 24hr restaurant to let him sit inside out of the weather all night. I did not do the same for those expected others to pay for their mistakes. But, in your ignorant eyes I’m sure that makes me a bad person. You are so ignorant you don’t realize that why many get pissed about fraud in the system isn’t because they are not empathetic, it’s because they are, it’s because they know people, or were people who needed the help, and they are afraid that the bad apples are taking from the truly needy. During the great depression the US had a large surplus it could draw upon to overcome, now we only have a large debt to add more to. Finally it’s ignoramuses like you who when confronted with facts that graft is huge and wasteful, and welfare states breed takers who go find what you think are sob stories, like the reporter who spun the kiwi into a sob story, so you can cry “it’s for the children and you are just mean because you won’t give your hard earned cash to the people who may not need it” “oh the humanity”; “that rich guy gots more then he needs he should be forced to part with it” or be beaten up, his stuff taken and locked up if he refuses. You always conveniently leave out the last part. My family when I was a child had food stamps, my dad was always working, he’d work on the car in campground on vacation, he didn’t smoke, drink, gamble or do drugs. Had lots of kids though, and he made choices that resulted in him not being rich, but kept on working and didn’t blame others so, you can kiss the darkest part of my lilly white …

      • Irgonaut — 1) Paragraphs. Holy crap!

        2) As my citation pointed out (and common sense would indicate) anecdotes are a poor representation of poverty. Nobody is arguing against enforcement of welfare rules, but it is not legitimate to end all welfare just because of those anecdotes. Whether its kiwis or cigars or lottery tickets, anecdotes are still anecdotes — this is the opposite of understanding.

        I don’t think you understand what an anecdote means. The history in 1873 was not an anecdote. By 1877, ~20% of our population became an impoverished, semi-permanent tramp class. You’ve seen the cartoons of hobo’s hitching a ride on railroads — the Panic of 1873 created the hobo class. That was reality for 20% of our population; not a few individuals.

        The point I was making has little to do with what has changed; it was about the arrogance of those who cannot empathize with people who have a different reality. The point has to do with how those lucky enough to still have jobs considered those hobos “lazy” and 16 states outlawed soup kitchens to stop the “laziness.”

        Those technical advances mean little to those who have no jobs. People without money don’t have cars and have their electricity turned off. That’s why we have welfare. The rest of what you write is nonsense. Those hipsters in Oregon are idiots (obviously). Why would anyone care about them?

        Gamecock writes —

        All welfare is abuse. Government taking money from one person and giving to another. Pure evil.

        The government does this all of the time. ~ $2 trillion per year is funneled up to the wealthy few usually by mandating that you spend money a certain way (4x welfare for the poor) — for instance, the tax incentives given to Apple which result in shifting jobs overseas.

        That being said, up until the Great Depression, we lived with your system. It was an abject failure. Every single downturn led to mass homelessness and starvation. Yet, these downturns were almost always caused by the crash of high risk financial investments by a few people. Yet, they always manage to blame the poor and immigrants.

        I don’t want to spend money on Welfare, but most of the people on welfare did nothing to get themselves there. They have health problems or are elderly or are children. The problem for able-bodied adults is the inability to find steady work in a decent paying job (40% of all people on welfare work at least intermittently full time.) This widening income inequality has been created by government programs to help the wealthy.

        Most of us will be in that situation before long.

    • It is not quite that simple though. Certainly here in the UK the poor tend to live in rented homes where they have no control over the type or efficiency of heating systems or even electrical appliances such as washing machines and fridge freezers. The wealthy generally own their own homes and can afford to install more efficient heating systems, solar assisted heating and efficient electrical appliances. So the poor probably spend more PER UNIT of energy than the rich.

      I live in UK and most would consider me wealthy (top 10% income). I would be considered a climate criminal by most due to owning several classic Land Rovers and having a solid fuelled home.

      We have highly efficient fridge freezer and washing machine. The best available. We also have choice on our electric provider and pay a very low price per kW. Our house is solid fuel powered by choice but the ability to burn a range of fuels from logs, anthracite and coal means we can buy whatever is cheapest and stockpile it in the cheapest season. The result is that we spend £1200 a year on total household energy for a family of four, living in a period 1850 cottage that has no modern insulation and yet is typically heated to 25c via solid fuel all winter. That cost also includes the bottle gas for the BBQ. In comparison an elderly neighbour living on her own in rented house with inefficient grid supplied gas heating spends the same £1200 a year on her energy and her house is freezing compared to ours.

      The very poor are often forced to use pay meters for electric or gas, these carry very high prices per kW compared to us.

      • PS. The UK operates a cold weather payment which is supposed to help the most vulnerable by paying them addition benefit in very cold weather however it relies on temperatures published by official body (met office?) and often the official temperature for our area is some 5c higher than our home weather station shows. These artificially higher official temperatures mean the cold weather payment is not paid out.

      • mud4fun

        In Africa most people only have dry cell batteries for electricity. It costs $50 per kWh and always has, meaning, it is rigged. It was $50/kW in the 1970’s. What does that tell us?

        Big Gas is sitting on every Board they can find to influence, promoting gas as the only clean fuel of the future. They anticipate raising the price of the gas ad infinitum and having the government supply a morality subsidy for the poor.

        In the Soviet Union the heating subsidy was based on the local temperature record so the Siberian weathermen systematically under-reported the temperature in order to generate greater subsidies. What goes around stays around.

    • Really my thermostat is set to 66F what’s yours? So are our bills the same? What if I have to live in an old house with no insulation and your new house has new 6in walls that significantly lowers the heat bill. You assume much.

      • I don’t know how you manage that. My lounge is 22degC/23degC and I find that cold when sitting around doing nothing. At Christmas/New Year, I had it at 25/26 degC and that was far better. On the other hand, I rarely heat my bedrooms, and, in the winter, they are usually about 14degC which is OK.

        It is one of the most important things in life to be able to properly heat your home without fear of cost. In Europe this is becoming a very real problem for many since the cost of energy is at least double to that charged in the States, and with older less well insulated houses, the problem becomes even more acute.

      • I don’t know what age you are, but I am coming up to eighty and now feel the cold far more than I did at 75. Even with my sitting room running at 22/23C I have to have a blanket across my knees to keep my legs warm when sitting, and I live in a modern apartment (I also wear woollen trousers, an under vest, warm shirt and a woollen sweater). I guess that I will have to jack up the temperature to 24C next year. Fortunately I can afford to do it, but there are an awful lot of old people in the U.K. that can’t, and any increase in prices due to tax will inevitably result in deaths.

      • Back when, the house I grew up in was heated by coal. It was $20/ton. 2 tons heated the house for a year and then some. That’s when people where paying at least $50 /month for gas and more for oil. It was not uncommon to be wearing shorts and a tee shirt on the coldest days. It was not a concern during the 1970’s when there were fuel shortages.
        A few years back I went to visit some people in NYC, ( Queens) the house was 55 F in February . And they weren’t poor. Everybody wore jackets and coats in the house. I think when it comes to living in a comfortable well heated house, I’ve lived a charmed life.
        There are most definitely climate refugees. They are the ones moving from the northeast US to southern states to escape winter. And Canadians flock down to Cape May, NJ. And in the western US, they move on down to Arizona. I wonder if the highly vaulted UN keeps stats on how many people leave on account of climate. And the Asians in Colorado go back to Hawaii. I’m like, ohhhh…

      • I have found you get used to it. Occasionally I wear a sweater and almost always slippers and a throw for the couch. I try to remember to turn it up when guests come over. I keep forgetting they are not used to it. But, the place is a renovation originally zero insulation, found out real quick that I couldn’t afford to keep it at 70F, especially when oil was $4 a gallon, because it is a HUGE renovation. But, a little suffering now and a big payoff in the long run, it’s all about what choices you make.
        Out here a lot of people use pellet stoves or wood to compensate, ($8 fee to collect downed trees in forest) I expect the EPA to outlaw wood soon so more people will be dependent on gov’t subsidies.
        Still much better then when I was a teenager, had an addition to the house that I stayed in heated only by a wood stove, cranked it up so it got to about 80F and by morning it was still cold enough to freeze water in there. (-15F outside) luckily was there only for a winter or two. I’m getting older I guess I should change that to -20F :) what with all the downward adjusted temperatures and all.

    • It is worth some amount of bother to demonstrate disputed facts, and Willis has been able to demonstrate that an energy tax is regressive. Things that “everyone knows” do turn out to be wrong, so it always best to check. However, thus fact is not disputed by very many people. Any search for problems associated with a carbon tax will show that this is generally acknowledged. That is why proposals for such taxes are often accompanied by some element of re-distribution of the revenue raised to the poor.

      • seaice1
        **That is why proposals for such taxes are often accompanied by some element of re-distribution of the revenue raised to the poor.**
        SOMETIMES is is accompanied by redistribution to some. It is still a regressive tax.
        There is no redistribution in Ontario where the poor are deciding whether to have power or eat. Electricity rates have doubled or more to subsidize wind and solar.
        ** However, thus fact is not disputed by very many people.**
        Really – check what is going on in Alberta.
        RE 8888
        **Not bad Willis, just dumb Willis.

        Heating or cooling a home, running lights and various appliances costs the same whether you are rich or poor – so of course a similar cost is a smaller % of a larger income. Sheesh …

        Why do you bother ?**

        Looks like you do not want to understand. The rich do not care how much it costs when it is a fixed amount. They would worry if energy became a percentage of their income. it is significant for the poor whether it is a fixed amount or a percentage. More people in Canada will soon take notice as Trudeau’s dictatorship starts imposing carbon taxes. Now the nonsense is in Alberta and Ontario.

      • @Gerald Machnee
        “[Ontario] Electricity rates have doubled or more to subsidize wind and solar.”

        My research suggests that Ontario’s high hydro rates arise because, after our failed CANDU Nuclear generators (61+% of our generation) reach their Bad After dates, we Refurbish them instead of buying much cheaper Hydro Québec power.

        Check http://www.gridwatch.ca to see that Wind & Solar rarely produce more than 5% of Ontario electricity. It could produce a lot more if ‘they’ were to mandate installing Solar on new buildings & retrofits, especially as prices fall with innovation & competition.

        This seems to be another strange form of inequitable tax on Everyone to support the highly paid Nuclear corporations & their unions. (Nuclear is unaffordable, uninsurable & undisposable.)

      • Gerald, sometimes or often? OK, I will not quibble. Of course it is a regressive tax, as I said all along.

      • SeaIce writes

        Any search for problems associated with a carbon tax will show that this is generally acknowledged. That is why proposals for such taxes are often accompanied by some element of re-distribution of the revenue raised to the poor.

        This is right (of course). I’m not sure why anyone would consider this rude or crude. However, while proposals are accompanied by re-distribution, the re-distribution is often removed either from the legislation or within a few years.

        You can read about all of the “welfare hate” in these boards to understand why. “I have to pay higher taxes on my fuel. Why are my taxes given to the poor in some sort of income redistribution scheme?”

    • Your reply is unnecessary, adds nothing to the debate, and you are making no point other than that you are rude & crude. Get out of here and stay out.

    • Not bad Willis, just dumb Willis.

      Heating or cooling a home, running lights and various appliances costs the same whether you are rich or poor – so of course a similar cost is a smaller % of a larger income. Sheesh …

      Why do you bother ?

      A better question might be, “Why would ANYBODY bother replying to your comment?” … and yet here I am doing exactly that.

      Let my try to explain: You clearly are not in touch with what “costs the same” means. A candy bar with a purchase price of, say, $1 does NOT “cost the same” for somebody making $ 150,000 a year as it does for somebody making $ 15,000 a year. The purchase price is NOT the issue. The issue is a person’s FINANCIAL ABILITY to afford to pay the purchase price to have ACCESS to the product or service required.

      You attempt to blow right over this as though it is nothing, when it is THE most important consideration of human survival in an economy where people work for a living to earn a paycheck that they live week to week to sustain, with absolutely zero backup, savings, or anything else to enable them to pay purchase prices for what they need.

      And I could have told Willis that heating would be number one with lower income people, because I have been there, I have experienced it, and I have witnessed it with others firsthand.

      So, before you trivialize the concept of affordability to berate a keenly written article, I would suggest that you go out and buy yourself a new Viper. Heck, I mean, it costs the same, whether you are rich or poor, and so there is NO excuse for you not to be sporting one of those babies.

    • Ian old mate,
      You can have yourself, I’ll have Willis – any day of the week – you jerk.
      Have a lovely day.

    • The rich tend to have bigger homes and more cars.
      A scientist tests his hypothesis, he doesn’t just assume it must be true.
      What do you do?

    • The reason why the rich are taxed at a higher rate than the poor, is that somebody has to cover for those who pay no taxes at all.

      Corporations don’t pay any taxes; they simply pass a tax bill on to their customers (higher prices), and to their employees (lower salaries), and to their shareholders (lower dividends).

      So everything the “poor” buy, costs more, than it would if everybody paid the same tax rate.

      Progressive taxation is blatantly unfair.

      G

    • What is more interesting than the obvious is the extent of the obvious. For example, who knew that poor people spend more than 50% of their income staying warm? You would think the carbon tax people thought that one through.

    • This is not possible.
      Bribery associated with the UN – NEVER!!!!
      The sooner we UNEXIT, the better.

      • George,

        The answer to your question will no doubt become clear within the coming months.

        It is my guess that there is no way to get that cash back ( unless expresident Obama wants to reimburse out of his own pocket. (joke)), but it would not surprise me if there was a comensurate adjustment to the next round of fees the US pays to the UN.

        In my view I think fees should be with-held completely and should the United Nations fail financially because of this, well, I would submit that this would constitute no disservice to the world as a whole.

        Cheers

  4. I presume the data is from direct expenditures?
    If so, it may be worse than that. Low income families are less likely to own one car (let alone two) and are thus more reliant on public transportation. So, while their spending on gasoline might be lower than expected compared to heating fuel, their cost of transportation would be comparatively larger.

  5. The old style socialists who actually gave a d@mn about poor people would be turning in their graves at the site of this sorry shower of champagne socialists competing to outdo each other on how much pain they can inflict on poor people, and how much environmental destruction they can cause.

    • Exactly so. Consider attitude of the liberal elites to the folks in Appalachia.

      Stereotypes are ugly. They do vicious cultural work and suggest that these people are not like us. We have nothing in common. And not only do we have nothing in common, but their behaviors and their traits are so deplorable that we don’t want to have anything in common with them. We need only make fun of them. We need only neglect them. We need only degrade them. That’s all they deserve. There’s a viciousness in that that is so inhumane and also justifies so much harm to the region and its people. link

      Feminist scholars will tell us that we have no duty of care for those folks because they are white and white people are always privileged.

      In his Inaugural speech, President Trump said:

      The forgotten men and women of our country will be forgotten no longer.

      I truly hope he keeps his word.

      • ” Consider the attitude of the liberal elites to the folks in Appalachia.”

        I think that is the attitude the liberal elites/radicals have for anyone who is not one of them. And it doesn’t matter what race you are. Look at how Blacks who supported Trump have been vilified by those on the Left.

        Let’s hope what we are really seeing with all the insanity going on with the Left, is their self-destruction. They sure are presenting an ugly picture of themselves to the rest of the U.S. and the world. Who wants to be part of that ugliness? Other than the mentally deficient and psychopaths?

      • President Trump was elected by the working class. The working class can not afford to spend a week in Washington, DC protesting anything. Those protesters have nothing to do with the working class. A substantial percentage of them are parasites. They like to label themselves Progressives. Let’s progress away from work!

      • Ahhh, commiebob, so the conservative elites care about the poor and working poor? You mean the ones who 1) fight against increasing the minimum wage 2) fight against unions, which leads to lower wages 3) run the companies that have shipped millions of jobs overseas 4) fight against environmental standards that affect the poor who tend to live closer to industrial facilities because that’s all they can afford?

      • Poor Chris, like most liberals, he actually believes that the policies of the left are designed to help the poor.
        1) Increasing minimum wage hurts the poor, it doesn’t help them. All wages are determined by marginal utility of the worker. That is, the pay of a person is determined by how much wealth that worker can create per hour. This is true for both rich and poor. Study after study has shown the truth of this. When minimum wage is increased, the poor don’t get increases, they get laid off.
        2) The same goes for unions. Yes unions did manage to increase wages to above market rates, but only for a time. What happened next was inevitable. Jobs went over seas, those that didn’t have been replaced by automation. Unions have been the worst thing that has ever happened to the working class.
        3) When government makes it too expensive to do business in the US, businesses leave. Why is this so hard for you liberals to figure out?
        4) The environment was cleaned up by the middle 80’s. The so called improvements since then have been all cost and no benefit.

      • Chris January 22, 2017 at 10:02 pm

        Ahhh, commiebob, so the conservative elites care about the poor and working poor?

        Don’t put words in my mouth. The fact that I believe the Democrat Party and its chosen elite have betrayed ordinary Americans in a vile and reprehensible way does not mean that I approve of the Republican Party and its chosen elite.

        I fully agree with President Trump’s inaugural address in which he said:

        “What truly matters is not which party controls our government, but whether our government is controlled by the people,” … “The forgotten men and women of our country will be forgotten no longer.” link

        If we are very lucky, President Trump will deliver. We should not forget, however, that Ronald Reagan also promised to Make America Great Again. Some people think he’s the one who got us into this mess.

      • What is a “feminist scholar” ??

        Some one who studies feminists, or a scholar who is also a feminist ??

        g is it synonymous with “Code Pinko”

      • george e. smith January 23, 2017 at 12:04 pm

        What is a “feminist scholar” ??

        They are almost always biologically female. They will describe their gender and sexuality in bewildering detail. They tend to have tenured positions in Women’s Studies programs. They mess up our kids worse than almost any other kind of pseudo-intellectual. If your daughter starts using words like “Hegemonic, racialized, problematic, intersectionality” she has been infected. link

      • As evil as Lenin was, he famously said that Communism was soviet power plus electrification. I doubt he’d have been in favour of ‘carbon tax’.

        The Old Left at least paid lip-service to trying to improve the lives of the working class.

      • Why were hermaphrodites excluded from the code pinko march ?? After all they get it from both ends.

        Why are those folks not more inclusive ??

        g

    • @Eric….I don’t know about that there where many rabid eugenicists, social darwinists, and malthusians in the “progressive camp” Look at Margret Sanger the Fairy godmother of Planned Parenthood.

  6. Regarding the surprising percentage of heating gas and fuel oil costs, I’m curious how the numbers would looks after considering direct government subsidies for lower-income households — or are these included?

    It seems to me that the tax itself would be punitive, and meant to shift energy usage to other sources. As for the subsidies, perhaps they are a reflection of the guilt caused by harming constituents.

    • Pardon my typo above. I write after being awakened by a loud chorus of owls at 2:30 am. I’m not upset by that–they’re wonderful. They’ve been hanging around our house for weeks.

      • I love it when the owls talk back and forth to each other, in the quiet of the night. There are a lot of them around this area. :)

    • Second Marnoff’s question: what is the actual cost (percentage of income) to low income families after government subsidies are factored in?

      Also, what percentage of the cost of production does government subsidize?

  7. If starving and freezing the poor with carbon taxes is bad, actually killing them is worse. The environmentalists accomplish this little trick by essentially forcing (largely lower income) people into dangerous little lawnmower cars with the insane CAFE standards. This “green butchery” has already killed tens of thousands more Americans than Osama Bin laden. Almost nobody seems to care.

    http://www.washingtontimes.com/news/2012/apr/27/cafe-standards-kill/

    • From the article:
      “According to the Brookings Institution,” Mr. Dunn wrote, “a 500-lb. weight reduction of the average car increased annual highway fatalities by 2,200-3,900 and serious injuries by 11,000 and 19,500 per year. USAToday found that 7,700 deaths occurred for every mile per gallon gained in fuel economy standards.”
      “How many deaths have resulted?” Mr. Dunn wondered. “Depending on which study you choose, the total ranges from 41,600 to 124,800. To that figure we can add between 352,000 and 624,000 people suffering serious injuries, including being crippled for life. … Fuel standards have become one of the major causes of death and misery in the United States”
      Why aren’t these included in CAFE cost-benefit analysis??

      • Why aren’t these included in CAFE cost-benefit analysis??

        If one excludes the possibility of fraud, the only logical explanation is that the value of the lives of the sort of people being killed is offset by the sum of the contribution to the war on overpopulation, and the climactic benefit that results from entirely eliminating the carbon footprints of a few thousands of Americans per year.

  8. Willis, it’s good you notice this little problem, but the progs are way ahead of you. They’re all proposing revenue neutral, Robin Hood style carbon taxes, where any increases in energy costs will simply be offset by the increases tax revenue being passed back to the poor. It will be a perfectly equitable transfer, free from beaurocratic meddling, and will bring long-needed social justice to the poor. It will also be free of any cost whatsoever…If you ask a die-hard prog he’ll probably tell you the carbon tax will even generate new economic growth!
    What’s not to like?

      • There is no greatly increased effect. This is just made up and has no economic basis. I explained why, but lets have another go.

        The key thing is that in a market production is equal to consumption. Any change in one is the same as a change in the other. If the farmer grows 100 bushels of corn the consumer will consume 100 bushels of corn. This is because in a market the price will adjust so that the two are equal. (Of course consumption cannot logically be higher than production).

        This is why the price drops with a good harvest and rises when there is a shortage. It is the very basis of market economics.

        Therefore anything that affects production effects consumption to the exact same extent and vice versa.

        It therefore makes no sense at all to say one is questioning not the amount consumed but the amount produced. They are the same amount.

        One can consider various non-market mechanisms that could result in prices not falling enough to “clear” the market – price freezes would be one example, or weather preventing movement of spoilable goods. But you need to say what you think these mechanisms are to have a convincing argument.

        That is why a tax on corn products has the exact same effect (in a perfect market) as a revenue equivalent tax on corn-seed. If you want to argue the effect is different you need to point out the market failures that lead to your conclusion.

      • seaice1

        Your explanation is simultaneously incorrect and inapt.

        “The key thing is that in a market production is equal to consumption. Any change in one is the same as a change in the other. If the farmer grows 100 bushels of corn the consumer will consume 100 bushels of corn.”

        About 50% of the food sold in the US is not eaten. Another fraction of food gown is not sold. The concept of ‘suppressed demand’ is missing. People might eat more if it was possible. People might eat differently if they could afford it. The market simply doesn’t work as you describe it. Some markets are inelastic, others are not.

        Of course it is a regressive tax! By definition, it most harms those with the least capacity to absorb it. If it prevails, the only thing that will help the poor is to live in a warmer winter climate – something so often promised and failing to materialise.

        No country in their right mind taxes investment in wealth creating activities more than the profits generated by it. To do so would be nutz! Why? Because that is regressive taxation. It kills golden geese at the golden egg stage.

        Communist Ethiopia under Mirriam limited the amount one could invest in a private enterprise to 250,000 Birr. In 1987 it was raised to 500,000 Birr. Why? Because they wanted economic progress! If they had placed a 10% tax on that investment the result would have been 10% less productive capacity and many times that in future income foregone. That is what ‘regressive tax’ means.

      • Crispin,
        “Your explanation is simultaneously incorrect and inapt.”
        My explanation is both apt and correct.
        “About 50% of the food sold in the US is not eaten”
        Consumer waste is still “consumed” in the economic sense. It is the choice of the consumer whether they eat it or let it decay.
        “Another fraction of food gown is not sold.” Loss in the production chain is already included in the price, and there is no particular reason to think that a change in tax rates will alter this in a drastic way.

        There is no “greatly increased effect” in taxing corn seed rather than corn products.

        ” People might eat more if it was possible.” But it is not, so a pointless comment.

        “People might eat differently if they could afford it.” They almost certainly would, but this has nothing to do with what we are talking about.

        “The market simply doesn’t work as you describe it. Some markets are inelastic, others are not.” Elasticities change who the burden falls on (producer or consumer) but does not change the burden. So your raising elasticities is a distraction. Again it has nothing to do with the subject.

        “Of course it is a regressive tax!” As I acknowledged in my earlier comment. I am not disputing this.

        If you have an issue with what I have said, please quote the words you disagree with, as I have done here. Please explain why you think the explanation is incorrect.

      • seaice1;

        If you want to argue the effect is different you need to point out the market failures that lead to your conclusion.

        Sorry, but you don’t get to define your own terminology and framework for the discussion.

        That is why a tax on corn products has the exact same effect (in a perfect market) as a revenue equivalent tax on corn-seed.

        A statement predicated on a single input and a single output. An over simplification that has no basis in reality. Business works on profit margin. The margin is calculated against all input costs regardless of them being taxes or not. If the profit margin is insufficient to cover operating costs, then the company goes bankrupt. So, let’s see what happens when we tax an in put in a real world example of a supply chain. For simplicity, we’ll use a profit margin of 30% for all businesses, even though in the real world that’s not true, but close enough to illustrate the point.

        We tax energy. Let’s say that the increase in fuel costs increases the farmer’s cost of production of a bushel of corn by $1.00 because fuel costs are a major component of farming. Well the farmer has capex costs which just increased because taxing energy also makes the costs of his equipment higher, buildings cost more, price of fertilizer goes up… to cover his extra $1 per bushel of fuel cost, the farmer must sell that bushel of corn for $1.30. Now the bushel of corn has been bought by a feedlot operator who raises cattle. So her input costs just went up, and she has increased capex and opex costs as well, so when she sells her cattle, she has, to maintain her operating margins, get $1.69 out of her product (cattle) for every $1.30 of corn she put into it. Of course the cattle have other costs as well, so as a percentage of the price of the cow, this may diminish. But make no mistake about, the person who buys the cow, is paying $1.69 for every bushel of corn that went into it. So the cow gets sold to a slaughter house which also has capex and opex that just went up, and their input cost (cattle) also increased. So they now sell their products at a higher price. One of their products is cattle hides, which they sell processors who produce leather. To maintain THEIR profit margin they must sell the hides for $2.20 more for every bushel of corn that went into the hide. The leather processor sells their product to a furniture manufacturer at $2.86 more for every bushel of corn that was buried in the cost of the leather. The furniture company builds a sofa, and sells it to a retailer for $3.71 for every bushel of corn that went into producing the leather they bought. Then a retailer sells the sofa to YOU, adding their margin, and congrats, you just paid $4.82 MORE per bushel of corn that comprises the initial inputs without which the sofa would not exist.

        A two tier (seed corn and bulk corn) does not take into account an actual supply chain. Anyone who has been in a position of responsibility for bottom line profit and loss will tell you, yup, that’s pretty much how business works. Arguing that taxation of an input is the same on both ends of the supply chain is naive. The earlier in the supply chain you apply the tax (and energy is about the earliest level there is, as well as the most pervasive because it enters the supply chain at ALL levels of the supply chain) magnifies the cost to the end consumer many times, in this example, nearly 5:1. The longer the supply chain the worse it gets. The supply chain for producing a car for example might have dozens of layers.

      • David.

        “A statement predicated on a single input and a single output. An over simplification that has no basis in reality.”
        First up, can you confirm that you agree with my analysis for a simple producer /consumer relationship?

        I will explain again, this time with a longer supply chain.

        Lets look at apples. The cost of apples rises say 10% because of a tax on apple trees. The farmer passes on as much of this cost as he can, but the increased price will lead to a reduction in demand. The farmer cannot simply raise his prices 10% and expect people to buy as much as before. The price is determined by the supply and demand curves. If people are pretty much as happy with oranges as apples, the consumers will simply switch. This means the price will not go up much as no one will buy at the raised price. Now apple farmers will have different efficiencies. Some would just about make enough profit to keep going (the marginal farmer), whereas others would produce apples more cheaply and would have made a bit more profit than the marginal farmer. These are said to have a producer surplus. The marginal farmer no longer makes enough money producing apples so he stops producing them and some of the other farmers now become the marginal farmers The result is we get fewer apples produced and consumed.

        In your hypothetical supply chain the farmer raises the price and passes on the full cost, and the consumer simply continues to consume at the same rate as before. Thus is not usually going to happen. This is very basic economics.

        The really interesting part is that we get exactly the same effect if we tax the consumer instead of the farmer. The apple is now more expensive, so the consumer switches to oranges. The demand drops and the price adapts along the same supply and demand curve. The same farmers stop producing apples and we get fewer apples.

        Now lets introduce another link, the apple pie manufacturer. Imagine all these apples went to the pie maker. The situation is actually unchanged. The consumer of the apples is now the manufacturer. They can pay more for the apples and raise their prices, they can pay more for the apples and not raise their prices, or they can switch to making cherry pies. How they react depends on their own customers preference for apple pies over cherry pies. They will do so according to the supply and demand curves for apple pies. If we say the consumer will simply switch 100% to cherry pie if apple pies go up in price and the pie makes can switch at no cost, then the price of the apple pie cannot be raised. The result is that that pie maker demands fewer apples and the farmer produces fewer apples. What they will not do is add on the whole cost and expect to sell the same number of pies.

        The interesting part is that we get exactly the same outcome if we tax the apples, the apple trees or the apple pies. The number of apples grown and the price of those apples responds in exactly the same way wherever the tax is applied. Wherever the tax is applied, the burden always adjusts along the supply chain and ends up in the same place. In the case of our hypothetical apples where the consumer is happy to switch to another fruit, that is the farmer. In reality it will be shared between farmer, pie maker and consumer in some proportion dependent on elasticities of supply and demand.

        You are quite close when you say “Business works on profit margin. The margin is calculated against all input costs regardless of them being taxes or not. If the profit margin is insufficient to cover operating costs, then the company goes bankrupt.” This is exactly what happens when we raise input costs. We do not simply pass on the costs and expect people to consume as much as before. What happens is marginal companies go bankrupt or switch to other things. The result is less production and consumption of the item.

        Now look at fuel. This raises the costs for all sectors, so they will all have to raise their prices or go out of business. This will result in lower production, but it will not amplify up the supply chain any more than a tax on apples does. It affects every part of the supply chain, so the costs go up at each point, but that is not an amplifier effect. It has exactly the same effect as individual taxes that raised exactly the same revenue but were applied directly to each link in the chain.

      • seaice1
        First up, can you confirm that you agree with my analysis for a simple producer /consumer relationship?

        There’s no such thing, and hence no reason to consider it.

        If people are pretty much as happy with oranges as apples, the consumers will simply switch.

        We’re talking about a tax on energy which is pervasive throughout the supply chain. Again, such a simply model doesn’t exist in reality, and isn’t applicable to a pervasive tax in any event.

        In your hypothetical supply chain the farmer raises the price and passes on the full cost, and the consumer simply continues to consume at the same rate as before.

        The consumer does no such thing. The final price is still amplified. Consumer reduction in demand simply means that the high cost low volume producers at any given point in the chain can no longer compete as they cannot survive on the reduced cash flow (opex may drop but capex gets higher). Less suppliers at any given tier means less competition and once the weaker players are gone, prices rise, screwing the consumer yet again.

        It affects every part of the supply chain, so the costs go up at each point, but that is not an amplifier effect.

        Wrong again. each tier has to ear a profit margin over the costs of the tier below. More tiers, more amplification. That’s what I already demonstrated to you.

        t has exactly the same effect as individual taxes that raised exactly the same revenue but were applied directly to each link in the chain.

        Let me see if I can word this so you can understand.
        NO IT DOES NOT
        The TAX revenue may be the same, but the cash flow in the system has increased opex at every step in the chain, and each step amplifies the one before it.

        It is in NOW WAY the same thing. If you want an example, Canada replaced the FST (an input tax) with the GST (a tax on output). The Canadian consumers were angry because an “invisible” tax was replaced with a “visible” tax and they were furious. They tossed the Conservative government out of power and voted in the Liberals who had run on a platform of getting rid of the GST. What did the Liberals do when they got into power? They entrenched the GST

        Why? Because the Canadian economy became much Much MUCH more competitive and efficient WHILE RAISING SIMILAR AMOUNTS OF TAX REVENUE. Costs to consumers dropped, exports increased, the benefits were massive. All because an input tax is insane and filters through the economy in a manner that cannot be anticipated, cannot be mitigated, and does enormous damage at all levels, to the poor the most.

      • David, I have done my best to explain an extremely well accepted and uncontroversial element of basic economics. It is a bit counter-intuitive and it is a bit difficult to get one’s head around. I understand why Richard Tol did not engage in such discussion as it is pointless if people are not prepared to even try to understand.

        Don’t listen to me, listen to some other sources. Wikipedia:
        “Tax incidence is said to “fall” upon the group that ultimately bears the burden of, or ultimately has to pay, the tax. The key concept is that the tax incidence or tax burden does not depend on where the revenue is collected, but on the price elasticity of demand and price elasticity of supply.”

        Some others:

        Boundless.com
        “Tax incidence or tax burden does not depend on where the revenue is collected, but on the price elasticity of demand and price elasticity of supply.”

        EconPort:
        “The manner in which the burden of a tax is distributed among economic units – consumers, producers, employees, employers, and so on. Or in other words, which party carries the actual burden of the tax.
        The actual tax burden does not always fall on those who are statutorily assigned to pay the tax (the legal assignment is called the Statutory Incidence). So, who actually bears the burden of the tax? This depends on who is best able to change his or her behavior in response to the tax or who has the greater elasticity. Economic analysis indicates that the actual burden of a tax is independent of whether it is statutorily placed on the buyer or seller.”

        economics stack exchange:
        “All page numbers refer to Principles of Microeconomics, 7 Ed, 2014, by NG Mankiw.

        [p 125:] Taxes levied on sellers and taxes levied on buyers are equivalent.
        [p 156:] … When a tax is levied on buyers, the demand curve shifts downward by the size of the tax; when it is levied on sellers, the supply curve shifts upward by that amount. In either case, when the tax is enacted, the price paid by buyers rises, and the price received by sellers falls. .

        This is not something I just made up, it is a logical consequence of supply/demand curves. To reject it is to reject economics. You are not arguing against me but NG Mankiw. Look him up, he is a conservative.

        iastate econ101, looking at imposing tax on the seller:
        If you look at the outcome here, the result is identical to what
        happened when the tax was levied on the buyer instead
        .
        This is an important lesson: Who actually pays the tax (i.e., the tax
        incidence) does not depend on who the tax is levied on.

        heritage.org
        Whether the tax is described as being paid by the producer or by the consumer, the outcome is the same: The rise in the price to the buyer to Pc, the drop in the price to the seller to Pp, and the drop in production to Q1 are identical whichever view is taken and depend entirely on the rate of the tax and the slopes (elasticities) of the supply and demand curves.”

        This is literally Econ101 and supported by The Heritage Foundation.

        If it does not matter where the tax is levied to who pays the burden, then how can there possibly be an amplifier effect if the tax is levied on one area (energy supplier) rather than another area? It logically cannot be the case. Either all these economists are wrong or Willis is wrong.

        Since Willis said he was not concerned with amount of consumption but with amount of production whilst not recognising that they are same thing, my money is on the economists.

      • seaice1
        Either all these economists are wrong or Willis is wrong.

        I get it. Willis is so wrong, and I am so wrong, that economists can’t even be bothered to come out of their ivory tower to explain why we’re wrong. That’s the stink of a man with no argument to make. Hilariously, in this case, YOU are wrong because you don’t even understand the very economists you quote. You are all excited because they say that it doesn’t matter WHERE the tax is collected and you think that supports your case. WHAT is taxed is a different issue entirely. That you cannot differentiate between the two explains much about your primitive understanding of economics and inexperience with actual real world supply chains.

      • David.
        “that economists can’t even be bothered to come out of their ivory tower to explain why we’re wrong. That’s the stink of a man with no argument to make.”
        I pointed you to several websites where economists have come out of their ivory tower to explain to us lay people. Richard Tol may not want to, but he is not “economists”. As I said there are many reasons why he may consider it a waste of time.

        “You are all excited because they say that it doesn’t matter WHERE the tax is collected and you think that supports your case. WHAT is taxed is a different issue entirely.”
        What is taxed is not a different issue from the where the tax is collected. One way I change where the tax is collected is by changing what is taxed. I shift the point of collection from producer to consumer by taxing either apple trees or apples, either corn seed or corn products.

        Perhaps an illustration closer to the main point of discussion here. Say I wanted to raise some revenue by taxing carbon in some way. I could tax oil, coal and gas produced. Or I could tax the CO2 emitted. Not at the same rate, but to raise the same revenue. In the first instance the tax is paid buy oil and coal companies, in the second by factories and power stations and fuel users. You are saying that it would have a greatly increased effect on the economy if I tax the producers rather than the emitters. I say that is rubbish and to a first approximation it makes no difference.

      • David.
        Seaice1: “First up, can you confirm that you agree with my analysis for a simple producer /consumer relationship?”

        Davidmhoffer: “There’s no such thing, and hence no reason to consider it.”

        On the contrary, economics courses always start from this basis. If you can understand the simple basis you have a chance to go on to understand the complexities of the real world. If you do not consider the simple case you will not be able to understand the complex case. You reject the need to consider supply and demand curves, which is why you are failing to understand.

        Just like understanding mechanics starts with friction-less examples, then adds in complexities of the real world, so understanding economics starts with simple producer/consumer relationships and adds in the complexities of the real world. If you think there is no point in considering the simple picture you will not understand the complexities.

      • One constant with leftists is that they have an over simplified view of pretty much everything.
        seaice has reduced the economy to such a point that it is no longer recognizable.

      • Mark w. It is the same approach taken by every university and college with an economics course. Or do you know better? Find me one course that does not use supply/demand curves. You may find it odd, but the problem lies with you rather than with the approach.

      • seaice1
        If you can understand the simple basis you have a chance to go on to understand the complexities of the real world.

        I work in the real world. I make a very good living in the real world by managing precisely these issues. In fact, I’ve made a lot of money helping other companies manage these issues. Here comes you, telling me what I have to understand before I can understand the real world and do the job I have been doing for three decades. LOL.

      • David, astrologers can make a very good living, it does not make me believe them. Rejecting supply and demand curves as too simplistic to be worth considering is not a confidence inspiring position for you to take as it forms the basis of modern economics. All you have offered in their place is an assertion that the economy will work in the way you think it will.

        Start with the simple then add in complexities is a good way to approach things.

      • seaice1;
        Rejecting supply and demand curves as too simplistic to be worth considering is not a confidence inspiring position

        I don’t reject them. I use them all the time. What I am rejecting is your use of them. You keep applying simple models to issues where they are not valid. I took some economics classes in university. When you get out into the real world you learn very quickly that what is in the text books is sometimes but not always applicable, and applying it to places where the theory does’t fit is a mistake.

        You keep applying a simple supplier/consumer demand curve to a supply chain whose output is predicated primarily upon value add processes. The longer the supply chain is, the more the price is predicated upon value add processes at each step of the chain, and the less applicable a simple supply and demand curve becomes. An input tax gets magnified by the value add processes, just like every other input cost, and these are NOT considered in a simple supply and demand curve, and which is why your use of supply and demand curves is inapplicable. Input taxes, particularly pervasive taxes such as energy taxes, infiltrate the value add processes, and do so at multiple points in the chain, Supply and demand models AFFECT value add supply chains they do not DESCRIBE value add supply chains.

        Have you ever managed a supply chain? I have. Have you ever helped a government implement a new tax system? I have. Have you ever helped a company adjust their business model, work flow, market focus and supply chain in light of a new tax system? I have. Many times. I’m not an astrologer because I don’t get paid to make predictions. I get paid to make money.

    • Why Revenue Neutral Isn’t, and Other Costs of the BC Tax
      https://wattsupwiththat.com/2013/07/15/why-revenue-neutral-isnt-and-other-costs-of-the-bc-tax/

      If you need a laugh this morning read this from the ivory towers of George Schultz and Gary Becker …

      Why We Support a Revenue-Neutral Carbon Tax
      Coupled with the elimination of costly energy subsidies, it would encourage competition.

      The imposition of such a tax raises questions about how it should be levied and what measures should be used to see that the revenues collected are refunded to the public so that the tax is clearly revenue-neutral.

      http://www.wsj.com/articles/SB10001424127887323611604578396401965799658

    • The problem with the Progs reasoning is that it takes away the incentive to get out of poverty.

      • Leftists love poor people. Which is why their policies are designed to create as many poor people as possible.

  9. Willis I agree with nearly everything you’ve written above. BUT how will we “save the planet in 50 years” and from what? What’s the problem?

  10. I say again: fight CO2 if you wish, but fighting it by increasing the price of energy harms the poor more than anyone…

    I’d say don’t fight CO2. On ALL timescales there’s actually zero evidence that CO2 causes climate warming, and if it did the warming would be minuscule, as likely negative feedbacks predominate, and any warming is nearly equaled by that cooling negative feedback (see: the Thunderstorm Hypothesis [by Willis Eschenbach!]).

    CO2 is … good:

  11. Was the title inspired by a George Benson song, perhaps?

    I believe the children have no future
    tax them well and make their parents pay
    shame them with the guilt they all possess inside,
    give them no sense of pride
    don’t make life easier
    let the kids hereafter..
    have no electricity

    I decided long ago
    my global tax would cast long shadow…

    (etc., or something like it)

    • Khwarizmi January 22, 2017 at 12:21 am

      Was the title inspired by a George Benson song, perhaps?

      No, it was more of a play on “the unkindest cut of all”, viz:

      This was the most unkindest cut of all.
      For when the noble Caesar saw him stab,
      Ingratitude, more strong than traitors’ arms,
      Quite vanquished him. Then burst his mighty heart,
      And, in his mantle muffling up his face,
      Even at the base of Pompey’s statue,
      Which all the while ran blood, great Caesar fell.

      Thanks,

      w.

  12. Willis, you say,

    I didn’t expect the main expense to be heating (water and space heating) and the smallest to be gasoline.I didn’t expect the main expense to be heating (water and space heating) and the smallest to be gasoline.

    That’s because the choice at the bottom isn’t between:
    A) Have this.
    B) Not have this.

    At the bottom you are only buying necessities anyway. So the choice is between:
    A) Have this.
    B) Have an inferior alternative.

    Fore transport the alternative is to use public transport and pool the gasoline over many people.

    For heating and housing the alternative is more people sharing a smaller space – granny and cousin living in. But your figures look at households income, not individuals.
    It’s an artifact of how your data is gathered, not a real effect on individuals.

  13. The “progressives” hypocrisy makes me ill. And not only on this subject.

    Sorry but that is just the way I feel these days.

    Just watching the ” marches” today in Washington and all around the world by these well fed , established, safe at home women, pushing their ($ 250) strollers just to make themselves feel “part of “? What? ?
    They can’t even answer simple questions when asked,
    Like, ” why are you here”. They haven’t got a clue!
    To the ladies ( like my partner ) that are so angry at these whooshes, you are not alone , she was so sick of this she actually left the house for a cool down.( and that took an hour!).

  14. i am surprised it is the same percentage for gazoline.
    A tax on energy would have a cascade effect, because first the price of everything would be higher as everything we do use energy.
    Hence ,some jobs will disappeard because they will be too “expensive” for poorer people ..a tax is a tax when you have less money you MUST make a choice. Some other woud be created ( first tax collector) …
    The point is how the money of the tax is supposed to be used?
    You can agree to pay taxes to be protected by police an army, fo judiciary system, even you are poor, but when the government spends money to do silly or useless thing, any tax is bad.

    well for the sake of demonstration let s suppose we will damage the climate ( ciimate change isnet benificial right now) ..a fair tax should be calculated regarding responsabily…and beneficial to the “victims”…well…

  15. The fascination with renewables and power inefficiencies leaves a deadly embrace.
    People have to choose between freeezing, starving and any chance of friendship through social interaction.
    http://theconversation.com/housing-stress-and-energy-poverty-a-deadly-mix-9484

    ‘The Salvation Army recently found that in regional New South Wales, just over half the people are going without meals to pay for electricity. A third of these people could not afford to heat their homes.

    In 2010, the Wesley Mission concluded that more than two-thirds of financially stressed households were making sacrifices to meet electricity price increases, and 10% were unable to meet the cost.

    Research by one of the authors on older private renters under housing stress found the impact was often devastating; interviewees told of how they were unable to feed themselves adequately or replace essential items.’
    The result is disconnection.
    http://www.abc.net.au/news/2016-06-09/electricity-disconnection-hotspots-mapped-in-new-modelling/7493876
    And when no one builds new base line reliable despatchable power, then the poorest suffer
    http://www.latimes.com/world/africa/la-fg-south-africa-electricity-20150312-story.html

    I have been inundated with complaints from the public and business about the reliability of the grid and its impact on the economy and the lives of ordinary men and women.
    — South African Public Enterprises Minister Lynne Brown
    Then, of course, there has to be electricity in the first place.
    In one first world country, Australia,South Australia to be precise,
    generator sales are booming
    https://www.google.com.au/search?q=generator+sales+south+australia&oq=generator+sales+south+australia&aqs=chrome..69i57j0.9318j0j4&sourceid=chrome&ie=UTF-8 with 2.7 million hits.
    This being a state that wants to build 50% renewables into a place with no land barrier between it and the Antarctic, the ‘land of the hurricane’.
    This blog should be disseminated more widely.

    ‘Who will hear the cry of the poor?’

  16. Willis, you’ll also notice that most greens are “AB” groups (professional/university). So, overwhelmingly those imposing the taxes are well off and with most being from the public sector – they have plenty of free time, whilst those suffering from the policy are too poor to have much free time to get involved in politics.

    And the 40% of income going on energy is just the start of it. Because with estimated of 37,000 early winter deaths each year in the UK alone, there have been over 1million such deaths since Hansen turned up the heating ~28 years ago.

    I’d love some greenie to chant the real truth: “the evil poor and old only thinking about their own incomes and life”. Because that’s what they really think!!

  17. Just another thought:

    At least this is a carbon “tax”, in the UK, bird/bat mincers are funded by a charge the electricity companies are obliged to put on the bills of electricity consumers.

    Now if this were a tax … it would be scrutinised each year by the politicians, press and public when the yearly government budget is publicised. But not being a tax … no one ever hears about it.

    And if it had been a penalty on the electricity companies …. they’d moan like hell and we’d hear about it.

    But because it is a charge on consumers, made in such a way that few even realise there is such a charge … they get away with it.

    And indeed, all the massive borrowing that has gone to finance this evil scheme … in reality that is government borrowing for a government project that ought to be on the government books. But by making it a charge on consumers … this government borrowing is made to disappear from the government books.

    And that is the real nature of this scam …. it is government taxation, spending that does not appear on any government accounts. It is massive obligations on consumers to pay for this unconstitutional and in my view illegal taxation … which almost no consumers realise exists. And it is pouring money into a self-enriching scam that then spends this ill-gotten gain brain-washing the public and politicians to keep funding the scam … to keep brainwashing the public … to keep funding the scam.

  18. The rich would get their loopholes, the poor would get their entitlements, the middle class would get the shaft.

  19. Just to say that in France they tax taxes. What I mean is that the government slaps VAT of 20% on the amount you pay in property tax. The property tax is used for local services. That said, the price you pay for water increases as you use more.

    • Not only in France.
      In British Columbia we also pay tax on tax
      My natural gas bill is proof of that
      We also pay tax on levies
      What the difference between levies and taxes vexes me.

      • Willis, one thing that should in fairness be considered is that, in Canada at least, the intent is that the carbon tax will be neutral, i.e. that it will be reimbursed to the population in some progressive way, perhaps in the form of a low-income refund at taxation time. In fact, this has happened to some small extent in Ontario where the government has cancelled the provincial sales tax on electricity bills. However, income tax was introduced as a temporary measure in World War II, and you know the result of that one.
        My beef with the carbon tax is that it is intended to push us off the use of fossil fuels. But onto what? I purchased a high efficiency gas furnace to heat my home. The efficiency went from about 65% to 96.4%. I didn’t do it for economic reasons but rather because I hate the idea of wasting fossil fuels which I consider to be a precious resource. Since I can’t get more than 100% efficiency, what am I supposed to do?

    • Noix, in the US there is also plenty “taxing of taxes”. Money taken out of a retirement account to pay taxes (or anything else) is taxed.

  20. Frits Bolkestein, ex Eurocommissioner:

    “Users now pay an average of 40 euro per month. That contribution will progressively increase to 63 euro per month in 2020. In addition, the Energy Agreement imposed a contribution of 36 euros per month on citizens. Together is about 100 euro per month. These expenditures have not been discussed in Parliament. This means that the usefulness and necessity of these measures have not been subject to parliamentary scrutiny.”

    Frits Bolkestein, was leader of the Dutch liberal party, minister of Defense and Eurocommissioner. He is a political ’eminence grise’ in the Netherlands.

    Source: https://wattsupwiththat.com/2017/01/20/about-intellectuals-and-climate-alarmism/

  21. A very interesting analysis, Willis. Perhaps you know that our energy prices here in Germany have doubled in the past 17 years (mostly due to the “Energiewende” which is the transition of the energy generation heading for renewables).

    Now we are starting to see exactly what you are writing. The poor are struggling to pay the energy bills. In 2015 the rate of energy supply shutdowns for households due to unpaid energy bills has risen nearly 13%. In 2016 14% of the households (more than 6 million) were on the border to be cut off of energy supply because they have unpaid bills of 120 € on average. Here’s the link, unfortunately oly in German. There are also other interesting data about electricity prices. http://strom-report.de/strompreise/#strompreise-stromsperren
    Regards from green wonderland where we have minus 12deg C currently, brrrrrrrrr
    Paul

  22. I have no argument with an energy tax hurting the poor the most but the cruelest tax of all is the homestead property tax. This tax must be paid even if you have no income and carries with it the threat to potentially murder every man woman and child by throwing them into a hostile environment if they cant pay for what the government wants. It makes the American Dream of home ownership the greatest lie ever told, denies the people the essence of what government is supposed to protect, makes government into organized crime collecting extortion and relegates the people to never ending serfdom. At least Medieval surfs could pay with chickens some other farm product or labor but us modern day surfs must pay with government currency something only the government can print.

  23. Every form of direct taxation is a crime against liberty. It gives government the right to know everything about you.Slavery was never abolished it just changed the way it looks. Form 1040 tells you you are a slave. BIG Government and freedom can never coexist.

    • Especially when the most powerful entity (federal government) taxes the least powerful (individual) and then squanders and misappropriates the money.

      It’s immoral.

  24. ‘A “progressive” tax is one where the wealthier you are the higher percentage of tax you pay.’

    No. The U.S. has few wealth taxes. Taxes generally are on income and transactions. Having a high income does not equate to wealthy, though it can lead to it, as YOU say.

    ‘the fact that the tax comes from the input to wealth generation’

  25. Looks to me that people who make less than 20k are wasteful, the percentage is more then double the 20-40k tier. What’s considered income? Food stamps? I doubt it. It should be for the purposes of this comparison. Which is probably why the big spike. One would think at that income you couldn’t drive. So something is skewing the data.

    • Under 20k are home all the time, as opposed to working people who are not home all the time. When you are home all the time you are running your heat or air conditioner all the time, you are watching The View all the time, you are opening get and closing the refrigerator all the time, to reduce boredom you are driving to the store for cigs and beer or whatever all the time.

  26. We should never confuse environmentalism with humanism:
    (References from Wikipedia)

    Humanism:
    “Humanism is a philosophical and ethical stance that emphasizes the value and agency of human beings, individually and collectively, and affirms their ability to improve their lives through the use of reason and ingenuity as opposed to submitting blindly to tradition and authority or sinking into cruelty and brutality.”

    Environmentalism:
    «An environmentalist broadly supports the goals of the environmental movement, “a political and ethical movement that seeks to improve and protect the quality of the natural environment through changes to environmentally harmful human activities”. An environmentalist is engaged in or believes in the philosophy of environmentalism.

    “Environmentalism or environmental rights is a broad philosophy, ideology, and social movement regarding concerns for environmental protection and improvement of the health of the environment, particularly as the measure for this health seeks to incorporate the concerns of non-human elements. Environmentalism advocates the lawful preservation, restoration and/or improvement of the natural environment, and may be referred to as a movement to control pollution or protect plant and animal diversity. For this reason, concepts such as a land ethic, environmental ethics, biodiversity, ecology, and the biophilia hypothesis figure predominantly.”

    And a curiosity: “The biophilia hypothesis suggests that humans possess an innate tendency to seek connections with nature and other forms of life.[1] Edward O. Wilson introduced and popularized the hypothesis in his book, Biophilia (1984). He defines biophilia as “the urge to affiliate with other forms of life». ”

    It seems that United Nations has departed from their charter (See article 1) and become in part a totalitarian organisation for environmentalists.
    “The UN has shifted to the idea of sustainable development in part because of climate change. According to the Intergovernmental Panel on Climate Change, if climate change is left unchecked, it will increase the likelihood of severe, irreversible changes to our ecosystems. Sustainable development, because it is less harmful to our ecosystems, can help in the fight against climate change. Sustainable development will also help the development needs of the poor and most vulnerable, who have contributed the least to the climate change problem.” United Nations – Key issues – Economic Growth and Sustainable Development

  27. I didn’t expect the main expense to be heating (water and space heating) and the smallest to be gasoline.

    A car is a luxury, a home is a necessity.

      • When you live in a rural area where public transport is often non-existent, a car is a must.

        That’s not what the figures show. People with limited means are forced to make hard choices, either/or, but not both. They choose home heating and hot food for their families before private mechanised transport. Some desperate people with no homes are forced to live in their cars, but that is not recommended in winter with temperatures below zero.

    • If there comes a time when you have to choose between paying your rent and paying your car loan, pay the car loan. You can live in your car but you can’t drive in your apartment.

      Advice from New York PC Frank Regan to grandsons in TV series Blue Bloods.

  28. If and when carbon tax is in force, it will be without consent. In its truest form, taxation without representation. The church needs the money, and ‘ you don’t want to go to hell, do you ? ‘ . In the name of ” Save the planet ” . Either a different kind of human or an alien. I opt for alien since it’s in the Hindu bible. While it’s a little out there, I can have that thought. Whether they are aliens or not, they personify evil. They can take advantage because we can’t differentiate, and most of us don’t know, care, or too busy to know.
    Try separating warming from the cause. On the one hand, it is helpful to know what journals are saying, then on the other, I feel I’m supporting them. I think they are blinded and are either accepting the premise of AGW without condition or are being forced.
    I totally disagree with Scientific American’s stance on global warming. They don’t even bother to present a proper alternate view. There is very strong evidence that the cause of warming, which they support as being caused by man, is wrong. Further the only solution they have is punitive and regressive. I would far better accept adaptation. We should be prepared for whatever changes climate brings. The warmist are saying ‘ what if we are right about warming ‘ and I’m saying ‘ what if we are right about cooling ‘. Are you going to take that chance ? Are you not really going to do any planning for cooling ? Cooling to me is a much bigger concern than warming. A shorter growing season means less food. More fuel to keep warm. People have lived in the tropics without air conditioning, it is not possible to live in places where it is cold without heat.

  29. There was an article in The Independent on Jan 3rd about a guy from New York who had given up using/abusing depressant substance – particularly alcohol.

    And what did he miss?
    In his own word – “Gossip”
    He couldn’t abide gossip unless he had a drink inside him. Didn’t have time for it.
    Think on – what do we get from the MSM, what are papers, TV (news channels and soaps esp), Facebook, Twitter, ‘Social Media’, Celebrity Culture all about – if not the generation and dissemination of Gossip.

    So, if you give up the depressant(s) of your life, you find yourself not only with an especially clear head but with a fair bit of time to use that clarity of thought.

    With me so far?
    Another thing is that you have to be happy in your own company. I think that that comes out of a lot of Eastern culture & thinking (eg Buddhism) If you wanna be nice to others, you first have be able to be nice within yourself.

    So now, you’ve got ‘good’ time within your own head and are able to explore it. What also comes out of these things (bastid feedbacks, what came first) is Self Confidence. Donald trump for example.
    Self confidence lets you ask, and answer or seriously explore really awkward questions and if you ‘get lost’ you now, by definition, have the time to explore some more. Especially with an tool like the internet.

    I’m obviously talking about myself here and my question is:
    How did it all get so crazy?

    By example, Government is now clearly working against The People, when it was originally set up to *help* The People, and certainly in the UK, Govm’t workers take some sort of oath to that very effect.

    Also, how on earth did saturated fat come to be so demonised – it is very fuel our heart muscles burn (C16) but medical, social and every other opinion say it is bad and must not be eaten.
    Then we wonder why folks have so many heart attacks. We know our cars stop with no fuel in them so why not other things?

    Ozone. Cause and effect utterly mangled. Ozone in the sky comes about because something else intercepts UV radiation. Ozone is the result of something absorbing UV, not the primary absorber.

    CFCs and ozone – since when do chemical reactions start in the freezing cold and accelerate as the temp drops? Utterly crazy yet swallowed by almost everyone.

    The whole Greenhouse lark – the atmosphere cools the surface, not warms it. Come on lets hear, what’s the surface lunchtime temperature on the moon? Why is it always over 45 degC hotter than anywhere *ever* gets on Earth yet Earth has The Greenhouse.

    Millennium Bug. Certainly a lot of very clever people (we know because they still – 2 decades later – gossip about themselves) sorted it and prevented a disaster but how the fook did it ever come to be a possibility in the first place. Not so clever now are we?
    Need I continue?
    So again.
    What Went Wrong?

  30. Living at the bottom end of the income scale, our family joke was always we had to avoid having month left at the end of our money … and this wasn’t always a jest, or trivial!

  31. Willis, I would have added food to the picture. When you work in the cost of FF fertilizer, energy for plowing/harvest/processing, fuel for transportation, heat/cool for warehousing/retailing – the incremental impact of energy cost on the poor is even higher than what you are showing.

    The issue with food becomes much more apparent for the truly poor people in the 3rd world as Oxfam pointed out on a number of occasions in relation to adding in the impact of bio-fuel on crop prices. For 3rd world poor the price of food was costing them 80% of their income. As European bio-fuel mandates went into effect, African farmers quickly found out they could get ~double the money growing bio-fuel crops. That reduced acreage for human food causing its price to increase enough that the price of food went from 80% of a family income to over 100% or – one or more in the family started on the path to starvation.

    Basically rich pompous self-centered European liberals started buying the food away from starving African children in order to feed it to machines patting themselves on the back declaring that they were more “carbon neutral”. After all, who can fault them or anyone for starving some African children in the course of “saving the planet”?

    In the USA, the “poor” really don’t care that much about the cost of food because our government provides food and heating fuel assistance, (along with housing assistance, free education and health care, etc.) It’s quite a contrast to compare the real poor in the 3rd world, people who work hard all day and now some cannot feed their family because of CAGW – to the many US layabouts on welfare who doing nothing but eat all day getting fat while complaining that their “disposable income” is shrinking.

    Although your chart is laudable, it doesn’t reflect the differences in who is actually paying a lot of the energy/food cost for those income levels under ~$40,000 – all the higher income people above them who are actually producing something, the ones really taking the hit for this nonsense, especially the middle class.

  32. That a price increase hurts those most who can afford it least is more a tautology than a reason not to increase a price. Having trouble buying things is pretty much what it means to be poor. Yet some prices must sometimes be raised.

    If carbon-dioxide emissions did indeed cause more harm than good, and if the net harm could indeed be accurately quantified, the mere fact that a tax used to internalize the cost of that harm would be a greater burden on the poor than on the rich would justify avoiding its imposition; failing to impose the cost-internalizing tax would perpetuate a distortion in the price mechanism and thereby cause society as a whole to continue allocating its resources sub-optimally.

    If you think government is a better agent for helping the poor than churches, fraternal organizations, etc., then you can increase welfare payments to keep up with the cost-of-living increase that results from visiting a harm’s cost more accurately on those who occasion it.

    That carbon-dioxide emissions do not impose an accurately quantifiable harm is reason enough not to impose a “carbon” tax. There’s no reason to demagogue the issue.

    • “would NOT justify avoiding..” I think you mean, judging from the rest of the piece.

      Very true, and well-put. There is an argument to put more of the cost on those who can afford it, but that is a totally separate argument. Externalities have to be paid by somebody, and it usually makes most sense for the consumers whose consumption produce the externalities to pay. Otherwise, why would they consume less (or ore efficiently to put it better), which is part of the point of the tax?

    • No accurately quantifiable harm? No quantifiable harm at all. It is all a fantasy. I asked a recognized authority, Dr. Richard Tol, for hard numbers for years 2010-2015. His answer: ‘I referred to your “hard numbers instead of estimates”. I assumed you mean “measurements” when you say “hard numbers”. You cannot measure a marginal. You cannot measure the future.’

      • I agree with you. My opinion–and it’s only an opinion, since there are few hard numbers–is that to really internalize the effect of carbon-dioxide emissions we would have to subsidize fossil-fuel use instead of tax it.

    • Joe Born January 22, 2017 at 5:50 am

      That a price increase hurts those most who can afford it least is more a tautology than a reason not to increase a price. Having trouble buying things is pretty much what it means to be poor.

      Joe, always good to hear from you. However, it seems you’ve missed my point. It’s not just that a price increase hurts the poor more. That’s true about everything.

      It’s that energy is 40% of the budget of the poor. At that point any increase is very hard to bear.

      Best regards,

      w.

      • “That’s true about everything.” Not really, the price of yachts, sports cars and champagne has little impact on the poor.

      • If you’re saying only that the taxes on fossil fuels are harder on the poor than they’d be if fossil fuel ate up only 4% of income rather than 40%, I agree. Certainly, 40% is a great burden. And the magnitude of that share does show how immoral such an action would be without justification. I was merely pointing out that, despite the burden, there would be a justification if fossil-fuel burning really did involve an externality of the type that “carbon”-tax proponents claim.

        Say a poor person has to spend $1000 per year on gasoline for his commute because living next to the store where he works would cost him $1500 more a year in rent. But let’s also say that gasoline use involves an externality: his gasoline burning costs neighbors an extra $1000 they have to spend to raise their foundations in response to the consequent sea-level rise. (I know, I know, we’re talking about a parallel universe here.)

        We could forgo the carbon tax because it burdens the poor. This would leave the poor person’s neighbors with the burden of their foundation work. Better would be to impose a damage-cost-internalizing gas tax even though that would raise the poor person’s gasoline bill to $2000.

        The reason it’s better despite that great burden on the poor person is that the price signal will cause him to move next to his place of employment in order to avoid a $2000 gasoline bill. He would thereby spare his neighbors the $1000 in remediation that burning gasoline for that commute would have necessitated. Out of that $1000 savings, we could have the neighbors pay an extra $750 in general taxes to finance, say, a $750 increase in the poor person’s earned-income credit.

        The consequence would be that the poor person’s response to the price signal makes society $500 better off: aggregate housing cost increases $1500, but that is offset by two $1000 reductions, one in fuel and one in foundation work. Society as a whole has an additional $500 to use on winter coats or attic insulation. And appropriate tax adjustment gives the poor person a share of that benefit.

      • seaice1 January 22, 2017 at 10:32 am
        “That’s true about everything.” Not really, the price of yachts, sports cars and champagne has little impact on the poor.

        Your ability to be wrong about most everything is impressive. The more affordable yachts, sports cars and champagne are, the larger the percentage of the population who can afford them and so will perhaps buy them. Which creates jobs producing additional units for them. More jobs servicing and maintaining them and refueling them and so on. Nothing helps the poor more than more jobs.

      • MarkW, your comment does not make sense to me. Do you mean for the poor heating MY house is like ME buying a yacht, or for the poor heating THEIR house is like THEM buying a yacht? or some other combination?

  33. I suspect that the methodology understates the cost of carbon taxes. There is an energy cost in just about everything, even services. Farm inputs were mentioned above. Every manufactured good entails energy consumption from the mine to the smelter to the assembly plant and in transport. When the price of everything escalates in accord with its fossil fuel content, inflation will be terrible. Goods and services becoming more expensive mean less will be bought. One man’s expenditure is another man’s income. It’s one thing to pay a carbon tax when it is only x% of one’s income. It is quite another when the rising cost of living has obliterated your income because a whole segment of consumers can no longer afford to buy what you were previously selling.

    Oh, the bureaucrats’ jobs will be secure. It is so hard to fire or lay off a civil servant. It is the “deplorables” who will get the shaft. I hope they understand and vote accordingly. I think they do understand that the good jobs that used to be available moved overseas. I’m not so sure that they understand that the regulatory burdens in the US (and the EU) make it very attractive to move production elsewhere, forget about wage differentials. I believe that DJT gets it and intends to reverse course.

  34. The regressive nature of a carbon tax is why Citizens Climate Lobby recommends a full and equitable rebate to each household of all carbon tax funds collected, in the form of a tax rebate from the IRS. This refund would be based on the number of dependents, up to 2 children.

    https://citizensclimatelobby.org/

    • Larry, that is nice but the whole idea is stupid. Why take money and then give it back?
      The answer is obvious and has nothing to do with forcing less energy use. The tax is redistributed to two sectors:
      1. The big bureaucracy that must be maintained to manage the tax.
      2. A large sector of the population that you want to control.

  35. Like Lemiere Jacques, above, I am puzzled by the graph’s unchanging percentage that goes to gasoline. Just eyeballing it, looks like about 30%. But 30% of $120,000 is $40,000 a year. This doesn’t seem to pass the sniff test. What am I missing?

  36. Willis, I like your stuff, but please stop writing about economics.

    A regressive tax is not what you think, and is not defined by the percentage of your income you spend on that tax.

    It is to do with the tax RATE, not the amount of tax. If the tax rate increases with use or with income, it is progressive. If the tax rate stays the same, it is not progressive, but neither is it regressive.

    Thus income tax is usually progressive, but in increments (i,e. your rate goes up at certain thresholds). Fuel taxes are not, neither are they regressive,

    • Tim, where did you fail economics? I’d like to avoid sending my kids there. Regressive taxation has nothing to do with the rate at which the tax is applied and everything to do with the effect on the percentage of income skimmed off. Please see Investopedia, Wikipedia, or in fact the IRS web site for a definition.

    • A regressive tax means that the more you earn, the lower % of tax you pay. Tax is money that you can not spend on other things.

      The more people earn the lower % of their income they spend on energy: see Willis’ graph. Energy costs are money that you can not spend on other things.

  37. Willis is quite right about the highly regressive nature of a carbon tax. It works by using fossil fuels unaffordable. As there are no near alternatives for most people in terms of costs and convenience that will mean for the vast majority reducing their energy consumption, along with spending more of their income on energy.
    How high will the tax have to be to save the planet? Economics Professor Richard Tol estimated in a 2013 paper that a global carbon tax would have to start at $210 tCO2e, rising by 4-6% a year forever. for gasoline that would be over $4 a US Gallon, rising to about $18 in 2050 and over $200 in 2100.
    Tol has also stated why in terms of economic theory, why the global carbon tax is the most effective. Alternatives such as regulation and renewables subsidies will be less effective and more costly. See in his recent paper The Structure of the Climate Debate.

    • However, a Global Carbon Tax will never be applied, as developing countries with 84% of the global population and two-thirds of GHG emissions are exempt for a primary obligation to cut emissions. These non-Annex countries under the 1992 Rio Declaration accounted for all the global growth in emissions between 1990 and 2012.

      To “save the planet” – i.e, stop temperatures rising beyond 2C – requires cutting global emissions by at least 80% by 2050. Anyone doing the math can see it is impossible. So a carbon tax will just impoverish the poor of the US and any other policy country. Such a tax could also destroy US manufacturing industry.

      • Manicbeancounter. “Such a tax could also destroy US manufacturing industry. ” my guess is that destroying industry is the goal. When industry and the jobs that go with them are gone then a whole lot of fossil fuel use will be too.

      • James
        The climate alarmists only hold some sway in a limited number of countries. They do not have much influence in most of Asia, which contains over half the global population.

      • manicbeancounter January 22, 2017 at 3:37 pm

        Your response makes little sense, as Asians (Read China and India) are beneficiaries of the carbon taxes. Therefore, Climate alarmists are working on their behalf in the destruction of US manufacturing.

      • Worth repeating from manicbeancounter:

        To “save the planet” – i.e, stop temperatures rising beyond 2C – requires cutting global emissions by at least 80% by 2050. Anyone doing the math can see it is impossible. So a carbon tax will just impoverish the poor of the US and any other policy country. Such a tax could also destroy US manufacturing industry.

        Why is this so difficult for some people to grasp ? … The parts of the world emitting the most CO2 are the parts of the world most unlikely to do anything to change this habit, and so anything that the CO2-conscious USA could do to reduce its own emissions would do NOTHING to offset these overwhelmingly greater emissions from the rest of the world.

  38. http://www.telegraph.co.uk/news/weather/11382808/Winter-death-toll-to-exceed-40000.html

    The cold weather death toll this winter is expected to top 40,000, the highest number for 15 years. The figures were described as a “tragedy for the elderly” by campaigners who warned that not enough was being done to protect pensioners from unnecessary deaths in cold weather.

    https://www.jrf.org.uk/sites/default/files/jrf/migrated/files/fuel-poverty-policy-summary.pdf

    Between 1996 and 2004, the scale of fuel poverty in England fell from 5.1 million households to 1.2 million households. However, since 2004 the
    rising cost of domestic energy has seen fuel poverty in England increase dramatically to affect more than 5 million households. We are told that the era of ‘cheap energy’ is over, and all projections suggest continuing upward trends in energy costs.blockquote>

    Ironically, a paper which has Richard Tol as the co-author, https://www.econstor.eu/bitstream/10419/50117/1/576823368.pdf

    “We study the effects of carbon tax and revenue recycling across the income distribution in the Republic of Ireland. In absolute terms, a carbon tax of €20/tCO2 would cost the poorest households less than €3/week and the richest households more than €4/week. A carbon tax is regressive, therefore. However, if the tax revenue is used to increase social benefits and tax credits, households across the income distribution can be made better off without exhausting the total carbon tax revenue.”

    I’ve been around long enough to realize those increased “social benefits” will be eliminated to reduce deficits within a few years.

  39. Average net pay here at $11.00/hr is $1200/ month.

    “The average cost of living is 211% of the national average, slightly lower than Boston, but still plenty high. The average rent for one-bedroom apartment rentals is $1,400, two-bedroom apartments go for $1,725, and three-bedroom apartments go for $2,300.

  40. Actually, many municipal utilities have a tiered system for energy costs. Try increasing the top usage tier pricing, and you’ll hear the howling for leagues.
    Taxing private planes, jet fuel, iPhones, homes over 6000 square feet, there are all manner of progressive taxes.
    Sadly, that’s why the 1% ensure politicians are in their same approximate economic class.

  41. Thanks for the information Willis, very revealing and a nice summary of the intent of CAGW.
    Robbing the many for the benefit of the well connected few.
    Ain’t Kleptocracy grand?

  42. The problem with jurisdictions having carbon taxes imposed on their populations already is the fact that they haven’t published (or never considered) the “metrics” for a reduction in the tax rate in the future if the global temperature show a cooling. The public should demand that governments publish the tax rate reduction if the climate doesn’t respond. Also rural property and farmers need a process to submit their carbon sequestering resource (trees and crop composition and area) for credit on the tax they are paying. The governments have forgotten about the sequestering end of private property – carbon dioxide fixing resources and the public should demand compensation for this. This brings up and entirely different topic of private property rights.

  43. I have read a story recently online called The Secret Shame of Middle-Class Americans and recently watched a show on 20/20 called My Reality:A Hidden America (links below).

    Although there are problems with both the article and the show they did have one thing very much in common. If you are not smart with your money or have a good job field to make decent money the chances are your life is very difficult in the hours you have to work to make ends meet or is very scary as you are living paycheck to paycheck or both.

    I have been fortunate enough to have a field where I have been able to support my family and have been lucky enough to survive economic downturns and corporate mergers but there were a lot of times (way to many actually) where it was paycheck to paycheck and praying that if something cam up to cards wouldn’t get maxed out.

    Although what Willis shows is true I feel that the Middle-Class families are also in the same spot with energy taxes as the poor are. How many people did you know that lost their homes in the last downturn and it surprised you as you thought they were doing well?

    I feel that the majority of people on this site are smart and have college degrees and probably have good financial smarts too. But there are so many others out there that look like they have it together and are so close to losing it all. So much of this country is teetering on the brink of financial ruin just as our government is.

    We like to bang on taxes and government mismanagement but our government is a reflection of our own lives. Those of us who get it need to keeping telling the rest to save more spend less and borrow only if absolutely necessary. I feel that what the US and Great Britain have just voted for is a step in the right direction but I don’t know if it will truly stem the tide.

    http://www.theatlantic.com/magazine/archive/2016/05/my-secret-shame/476415/

    http://abcnews.go.com/US/deepdive/diane-sawyer-income-inequality-my-reality-hidden-america-44770807

    • One quibble. I’m not lucky to be in the field that I am in. I worked my butt of in high school and college to get where I am.

  44. What is ” poverty” and who qualifies because they put in zero. For those that wish to and are prevented ( who are they) help is required .

    The world owes no one a living. Help where possible but succour the idle, never.

    • In the US, the poverty line is defined as a percentage (20%?) of the median income. So as income goes up, so does the poverty line.

  45. A regressive extortion is one that hampers and harms those who produce the most value, and the more value each produces, the more that individual is penalized. Because regressives do not want general prosperity, those who produce more value must be punished more severely, whereas, e.g. under “negative income extortion” or EITC those who do not produce are rewarded with some of the booty, plus additional value loaded onto later generations as debt.

  46. “This is because poor people spend a larger percentage of their income on energy than do rich people.”

    More statistical BS from Willis. Willis is the California hippie representative to the social justice legue. Power to the people by the clueless and inept. California is a place where the mild climate makes life easy resulting in a generally clueless population.

    In America, we do not let low income people go without heat and lights. The government picks up the tab by taxing my family income. I am glad to help the needy.

    When moderate income people pay their own energy bills, they are less likely to waste energy. The funny sad thing here is that my energy bills were much less than state and federal income tax, and property tax.

    The next thing wrong bonehead Willis statistics is 2009 had much higher gas and oil prices than today. Why would the EIA not do a new study? It is just a guess, but follow the money.

    There is the lot of pork in the energy assistance program. While I do not minding helping some old person, much of the program is funneling money from me to people who voted for Obama.

    Willis is guilty of confirmational bias.

  47. Willis is right, but there is a broader message in consumption taxes than this. Mississippi was the first state to institute a state sales tax back in the 1940s when the government needed more money to support government programs and delivery. It was copied by most states and the breadth of it spanned all goods and some services. The local franchise taxes pile onto this even more and include some services like phone service and waste pickup. That means the poor pay sales tax on clean water, electricity, food, and other basics. Eating out (even fast food) and using a phone are taxed at luxury good rates. Those states that don’t have a sales tax rely on some other distorted rate or source to spend as much or more than Mississippi. This is a big topic and I could go on for days.

  48. While watching the activities in DC, I had an interesting conversation with my son. He brought up the topic of Detroit intercity schools and fracking. He starts his first job as an engineer inside the beltway at one of those government agencies many of us would like to see cut back. He went college just outside the beltway where diversity is valued.

    Kind of my worst case nightmare.

    I do understand. When I was a new engineer before being trained to be a skeptic, I voted for Jimmy Carter. My son has no first has knowledge of inner city schools or producing anything while protecting the environment.

    I went to inner city schools in Ft. Wayne Indiana, a auto industry city like Detroit. I know first hand about race riot and pollution. I worked a summer in an auto industry factory. Before retiring I also volunteered at an inner city schools.

    Here is why Willis is wrong. In the US (and I suspect most of the world), the same calculus is taught at MIT as the community college. There is no regressive tax on opportunity.

    To quote my mother, “poverty is a state of mind, you can not be poor if you live in a town with a good library.”

    I am skeptical that inside the DC beltway such a idea would be popular. They are the government charged with taking care of us. I am waiting to see if the Trump gets heard and if my son hears it.

  49. It’s a moot point, that “carbon” taxes are regressive. So are a lot of things. The bottom line is that they are extremely bad for the economy, deadly in fact. And a bad economy most definitely bodes ill for everyone, especially the poor, not to mention the environment.

  50. When the percentage of taxes paid are tied to the amount of wealth one has or has earned, I’ve always liked this comparison.
    (It came out in response to the objections to the GW Bush tax cuts but it communicates.)

    Tax code explained in Beer
    Suppose that every day, ten men go out for beer and the bill for all ten comes to $100…

    If they paid their bill the way we pay our taxes, it would go something like this…

    The first four men (the poorest) would pay nothing.
    The fifth would pay $1.
    The sixth would pay $3.
    The seventh would pay $7..
    The eighth would pay $12..
    The ninth would pay $18.
    The tenth man (the richest) would pay $59.

    So, that’s what they decided to do..

    The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20”. Drinks for the ten men would now cost just $80.

    The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free. But what about the other six men? How could they divide the $20 windfall so that everyone would get his fair share?

    They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer.

    So, the bar owner suggested that it would be fair to reduce each man’s bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.

    And so the fifth man, like the first four, now paid nothing (100% saving).
    The sixth now paid $2 instead of $3 (33% saving).
    The seventh now paid $5 instead of $7 (28% saving).
    The eighth now paid $9 instead of $12 (25% saving).
    The ninth now paid $14 instead of $18 (22% saving).
    The tenth now paid $49 instead of $59 (16% saving).

    Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.

    “I only got a dollar out of the $20 saving,” declared the sixth man. He pointed to the tenth man,”but he got $10!”

    “Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar too. It’s unfair that he got ten times more benefit than me!”

    “That’s true!” shouted the seventh man. “Why should he get $10 back, when I got only $2? The wealthy get all the breaks!”

    “Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!”

    The nine men surrounded the tenth and beat him up.

    The next night the tenth man didn’t show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

    And that, boys and girls, journalists and government ministers, is how our tax system works. The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.

    David R. Kamerschen, Ph.D.
    Professor of Economics.

    • great explanation, also the founders of this nation considered taking away the fruits of ones labor(INCOME in modern terms) was something that should never be done by government…..voluntary use of that money/fruits that is taxed is much different than just directly taking money as the income tax does.

    • A little followup.
      The same percentage for all (no exceptions, no exemptions) would still have the “rich” paying more, just no more free rides.
      Maybe when the tax laws take money from everybody’s pockets (including corporations, foreign and domestic) equally rather than putting it into some’s, the voter’s might pay more attention to what’s going on in politics?

      (The end of “Those who promise to rob Peter to pay Paul can always depend on the support of Paul.”?)

  51. Willis you are correct as far as you go, but don’t forget that the added cost to the wealthy who also include those who make goods that the wealthier make for all, including the poor, get to deduct the energy cost from income and add to the price charged that isn’t covered by the deduction thereby further increasing the load on those who do not have rhe. income to deduct any costs from. The price of food that they buy for example is increased by such added costs to the producer not ameliorate by the tax deduction. Have I stated this clearly?

    • Your mistake is assuming that those who make things are also the rich.
      Most factories are owned by companies that are incorporated, as such they are owned by their shareholders. The vast majority of share holders in this country are not the rich, but the middle class. (When you factor in pension funds and 401Ks.)

      The rich do not get to deduct their energy expenses, any more than the poor or middle class do. Businesses on the other hand, do get to deduct all business expenses, including energy costs.

  52. Tax to protect against climate change should give anyone the right to demand proof beyond question. We are being fined for committing a crime when there is no proof that it was not just poor accounting and the money was not missing in the first place.
    In the case of temperature unless proven otherwise to an independent review body we should be assuming the rises were natural and only poor analysis failed to show the pattern was not a simple linear one which is nearly unheard of in nature.
    When we have daily night day and annual summer winter why should we just accept the lack of similar ones related to supermoons and Mars orbits that are weaker and longer term on the say so of a self appointed unsupervised clique who as good as tell us we are too ignorant plebs and must just accept their word? I use self appointed as they set the tests that allow use of the label climate scientists and that test excludes anywhere near adequate competence testing in practical assessment of data and its collection.

  53. You have to remember that part of the left’s plan is to create a crisis that they can fix by taking from the haves and give to the have nots. In other words, there would be short term pain, but eventually the poor’s energy use would be subsidized while the rest of us continue to pay for ours and theirs.

    • Taking from the haves to give to the have nots is what they claim to be doing.
      But for the most part, they take from the workers and give to themselves.

  54. Most families with incomes under $40,000 in the USA pay nothing at all – they are on welfare and other forms of assistance including heating and housing.

    I think that the person writing this comment has no clue, and I mean this in a nice way. Really, this person has no realistic grasp of what he/she is talking about. I certainly would like to see the supporting data behind this sweeping claim, if I am wrong.

    Are there people misusing government assistance ? — Sure, and that’s another issue. But here, in regard to the cost of energy, a very overgeneralized picture is completely distorting the greater reality. Especially in regard to energy assistance programs to help with household heating costs, this person has zero clue what the requirements are, what the limitations are, and how quick the money runs out (a first-come, first-serve situation, as I understand it, until the allotted money runs out).

    • Robert Kernodle,

      I think that the person writing this comment has no clue, and I mean this in a nice way. Really, this person has no realistic grasp of what he/she is talking about. I certainly would like to see the supporting data behind this sweeping claim, if I am wrong.

      You are 100 % correct. I am one of those people.
      Less than 40 thousand, I pay tax every year. NO Assistance of any sort!

      ( keep on working because the people on welfare depend upon it )

      I owe no one, anything. Except my Mortgage.
      Yet, I can NOT insulate my home, or do anything to bring any electrical bill down.
      Yet, not once in the last decade has income risen.
      Yet, since our health insurance was deleted by the ACA, we were forced on to it. What to do? well, pay a fine for nothing or pay a mandated price for nothing. Great choice eh?

      I just paid 1500.00 for 2 pair of glasses, no choice.

      And so many comments I would be able to counter comment with, well, there’s just to many.

      The people that showed in Washington to protest President TRump, don’t have those worries.
      I could never afford to go to D.C., my income doesn’t allow that, or let alone a week of for any vacation.
      I haven’t had a vacation in 30 years of marriage. Not on the priority list. We’re to busy supporting welfare and elites.

      Great Article BTW Mr. Willis Eschenbach

    • From an income tax administration point of view, it is you who “has no clue”. I mean that in a nice way too.

      • I mean this in a nice way,
        You obviously have everything you want, not equated with what you need.

        Like i had stated, i just spent 15 hundred, 1,500.00 dollars on two pair of needed glasses.

        ? Chipped in by the ACA = 00.00 ( zero )

        So Mr. Resourceguy, Sure wish i could’ve used that to insulate my home, UHMMM?? insulation or eye glasses ? I’m just not sure that i made the right choice, I must be deplorably uneducated.

      • From an income tax administration point of view, it is you who “has no clue”. I mean that in a nice way too.

        Okay, then show me, “from an income tax administration point of view”, the data from which you derive your claim. Otherwise, you are just posturing with generalizations that are empty.

      • Using data from … https://www.acf.hhs.gov/ocs/resource/liheap-annual-report-statistics … , we see that the latest Low Income Home Energy Assistance Program (LIHEAP) Annual Report Statistics show that about 6,000,000 USA households were assisted with heating costs [for the two years of data collected].

        Now using Table 1 from the USA Census website, … http://www.census.gov/data/tables/2016/demo/income-poverty/p60-256.html … we can determine that 109,202,000 USA households made $ 38,000 or less in income.

        So, putting this together, … 109,202,000 – 6,000,000 = 103,202,000 USA households making $ 38,000 or less, and these 103,202,000 households making $ 38,000 or less most assuredly DO have to pay something to heat their homes, or go without heat.

        In other words, according to the above data, … 5% of households making $38,000 or less DO receive government energy assistance, while 95% of households making $38,000 or less do NOT receive government energy assistance.

        Here’s some relevant income information from the USA Social Security Department:

        https://www.ssa.gov/cgi-bin/netcomp.cgi?year=2015

        61.55766 % of USA wage earners make $ 40,000 or less per year.

        HALF of USA wage earners make LESS THAN $ 30,000 per year.

        And here is an eye-opening article, based on data from that web page:

        http://www.washingtonsblog.com/2015/10/goodbye-middle-class-51-percent-of-all-american-workers-make-less-than-30000-dollars-a-year.html

        So, I stand firmly by my claim that the person making the remark about the $ 40,000 income was clueless, and the other person making the claim that it was I who am clueless is doubly clueless.

    • “Most families with incomes under $40,000 in the USA pay nothing at all – they are on welfare and other forms of assistance including heating and housing.”

      This is one of those idiotic myths that help rich people feel good about themselves. First, everyone pays taxes other than income taxes. For most of us, payroll taxes is the biggest chunk of our paycheck. Plus, we also pay gas taxes and other fees (ex. on telecommunications.) Second, wealthy people pay more because they benefit more from the system which creates their wealth.

    • I don’t know where $40K falls in the income spectrum, but I do know that the bottom 50% of income earners only pay around 1 to 3 percent of all income taxes paid.
      As to receiving charity, everyone on Social Security and medicaid/medicare is receiving charity, even if their pride won’t let them admit it to themselves.

      • MarkW,
        How can Social Security be a charity for those who paid into it all their working lives?
        I want my money back.

      • Payroll taxes are 35% of the Federal revenue. Whether you call it a “charity” or a “tax” is immaterial. It is an important part of our economy to prevent the wretched conditions of the Great Depression. As a regressive tax, payroll taxes are an enormous drag on our economy and it rewards companies for shifting jobs overseas.

        That’s why the tax structure has to change.

  55. Thanks, Willis Eschenbach, for an enlightening post on

    A “progressive” tax is one where the wealthier you are the higher percentage of tax you pay. On the other hand, I’ve said before that a tax on energy, the so-called “carbon tax”, is one of the most regressive taxes available. It is the reverse of progressive, it hits the poor the hardest. This is because poor people spend a larger percentage of their income on energy than do rich people.

    My personal conclusion says –

    Why not a ‘flat rate’ for

    – energy consumption and

    – water consumption

    like we already have for

    – internet connection and

    – communication / cell phones.

    • Johann, a flat tax like that is regressive. 100 bucks per month hurt you a lot if you only earn 1000. A really flat tax would be like 1% of your income ;-)

  56. Carbon taxes makes perfect sense when you understand the end game. That being reducing the global population. Under the carbon taxation more of the poor will be unable to heat their home in the winter or cool it in the summer. A number of those poor will die thus helping to reduce the world population.

  57. What’s really ironic here is that the largest chunk of low-income expenditures is to heat their homes during a time of global WARMING.

    Tell somebody who has no hope of paying their winter heating bill that they need to pay a tax because the globe is warming catastrophically. I would love to be there. (^_^)

  58. Willis, you are right on. It is worse than your chart shows. I know when gas prices were high, I would buy 50 cents to one dollar of gas to get home from work. I had a good job, but my mortgage payments were too high…couldn’t afford all the payments. I now live in Mexico where I can afford to live on social security only. ,,,JPP

  59. @Douglas Goldman

    “How do you define “small part”?”

    The number 10% comes from a study I read sometime ago examining the myth of the good old days and why things are better today especially for the poor.

    I was raised by adults who lived through the depression and WWII. Feeding a family on a budget and conserving energy was a necessity. Skill passed on to the kids. When I was working, I packed a lunch and ate at my desk.

    “Under no circumstances would my family be considered poor and yet food and energy amounts to ~28% of my monthly budget.”

    Douglas I have a problem with anecdotal experience. During the energy crisis of the 70s, I was on a fixed income in the navy and heated with oil. My heating bill doubled then doubled again. It hurt. We had good friends, also navy families, who had $1000 heating bills which were five times our bill. We had big old houses. The difference was sealing up the drafts. Old house do not have to be drafty.

    When our ship went to the shipyard adding 80 miles a day, we car pooled.

    Look around today. Starbucks has a drive through. You do not have to even turn off your engine to pay $4 for a cup of Joe.

    Feed corn fuels pellet stoves. A small chicken coop will not only feed a family but you can sell eggs to neighbors. There is satisfaction in this. Even had a beehive until a bear got it.

    Food and energy are cheap commodities. This allows people to make choices about how much they use. I can feed a crowd with a $100 in steak or a $5 pot of chilli. At company potlucks, I make green bean casserole using the recipe from the can of soup. It is always the first empty pan.

    Two points, first it about the choices we make. Second, I do not want the government to make my choices.

    • @Retired Kit P January 23, 2017 at 9:52 pm

      You state “I have a problem with anecdotal experience” and yet nearly everything in your post is anecdotal.

      I consider eating out and starbucks (Yuck!) a luxury. i did not include any of that type spending in the 28% figure. When I pull out just my energy expenses, they appear to line up pretty well with the chart above.

      Food is the bigger expense: Two ravenous teen boys and another growing quickly.

      I suspect your “$100 in steak or a $5 pot of chili” will provide a small meat portion to that crowd – not the whole meal. Ditto for the green bean casserole. A single dish does not a meal make.

      I have no doubt the poor are much better off today then yesterday. Really, we have very few people in the US who would be considered poor from a global perspective.

      And you are right, it is about choices. You have chosen to live in a place where you can raise chickens.
      I have chosen to live in a place with excellent schools and is close to work. My commute is 5 miles.

      I think 10% is very unrealistic.
      Take someone making $40K/yr with 5 mouths to feed.
      10% gives $333/mo for food & elec / gas / oil. Forget about fuel for a car.

      Oh, and I am completely in agreement with keeping government out of it.

  60. @ironargonaut

    “Mud4fun can they choose which apartment to rent?”

    Sorry ironargonaut, I missed your reply due to my mobile not showing the replies properly, now back on PC but no reply button your comment. Apologies.

    In answer to your question, yes they can choose the property they rent to some degree however in the UK (I assume the same in the US) the rented property in urban areas close to all the amenities and in the warmer UHI are more expensive. The more rural property where we live is much cheaper but is colder in the winter as it is outside of the UHI. So it is swings and roundabouts, the elderly can pay more for rental property in the towns and pay less heating costs but overall spend is roughly the same.

    We are not close to a major city, the nearest urban areas are smaller market towns or larger industrial towns. We are also in a relatively poor part of the UK. There are no university or academic establishments locally which means the rental property tends to be 3 bed detached houses or larger 2 bedroom flats rather than small 1 bed flats (as you would see in areas catering for students). The rental property tends to be older styles of property, poorly insulated and with very inefficient heating systems. Thus people who can’t afford to buy a house (or rather can’t afford the deposit) often end up paying higher heating costs than those of us who are lucky enough to own our own homes where we can install whatever heating system suits us. At the bottom of the rental property ladder are the cheapest rents but often accompanied by pre-pay meters which are charged at a far higher rate than normal energy tariffs.

    My elderly neighbour takes home about £500 a month in pension, I take home approx. 10x that amount after tax. The fact that my family of four in an off-grid solid fuelled period cottage were paying the same annual energy costs of £1200 as the elderly neighbour pretty much tallies with the chart at the top of this post. Our total energy bill is just 2% of our annual income whereas for our poor elderly neighbour it is 20%.

    She could move to a retirement flat in a city some distance from here and pay far less on energy but she’d then face a doubling in her rent.

    According to UK government forecasts*, 86% of UK households will be single people by 2033 (if we had zero net migration), approx 60% of those households will be age 65+ due to increasing life expectancy. So the energy costs that are already hurting the elderly will become significantly worse in future. This also places more demand for single person type property which pushes the prices of rental flats up even higher.

    *https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/6395/1780763.pdf

      • that should have been 68% of GROWTH in single person households of which 60% is aged 65+, having a bad day!

        Fact remains, the population is getting older, more are living alone and paying more on energy as a % of their income than the relatively wealthy working generations. I can see us going back to a time when multiple generations lived under the same roof. Seems to me to be more efficient use of energy to heat one house with 10 people in it than to heat 10 separate houses?

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