Cap and Trade California Style

California will raise taxes by from $550 million to $3.5 Billion in 2013 alone through Cap and Trade.  Here is how this tax scam works.  The law will ultimately apply to all major sources of greenhouse gas emitters in the state, and phases in over time.  Each source will have a base for greenhouse gas emissions.  The state will auction the right to emit greenhouse gases in excess of an annual cap which ratchets down 2-3%/year. The law envisions an 80% reduction in greenhouse gases by 2050.  Companies can also “buy” leftover allowances from emitters that have met targets or purchase allowances from projects that “remove” carbon from the atmosphere. 

 

The program is expected to generate $550 million to 3.5 billion in tax revenue for the state in 2013 alone.  One or more disastrous results will ensue.  The emitters will simply pass along the tax to consumers, downsize their operations or leave the state.   Also, the “market” for carbon credits provides a great incentive for widespread fraud (The European Union’s eight-year-old carbon trading market has been rife with fraud, fake credits and poor auditing).  In addition, the law will require a massive bureaucracy to administer (more wasted tax dollars).

The stated goal of the law is to address climate change.  Really?  Who believes that a state mandate can have any impact whatsoever?  Here is the funny but tragic part.  Technically, Cap and Trade is not a tax increase so the money generated from the program cannot be used to reduce California’s crushing deficit. Governor Brown signed two bills which earmark Cap and Trade revenue for spending on environmental purposes and for projects to help “identified disadvantaged communities” that tend to suffer the worst air pollution.  What a joke.  Higher taxes, more bureaucracy, more earmarks.

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