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  • Capping the Poor’s Ability to Prosper (Part 9 in a 10-Part Series)

    The difference between the price of a gallon of milk at a local grocery store and a corner market or convenient store may be modest, but add it up over the course of a few years, as well as paying higher prices for the rest of your groceries, and the difference is quite sizeable. That’s the theme of DeNeen Brown’s article in today’s Washington Post, asserting that the poor do not have supermarkets to walk to and thus pay a premium for most goods they buy:

    Prices in urban corner stores are almost always higher, economists say. And sometimes, prices in supermarkets in poorer neighborhoods are higher. Many of these stores charge more because the cost of doing business in some neighborhoods is higher. ‘First, they are probably paying more on goods because they don’t get the low wholesale price that bigger stores get,’ says Bradley R. Schiller, a professor emeritus at American University”

    Jeanette Reed, a retiree living on a fixed income who sold her blood for money, discussed how the housing market hurts the poor too: “You pay rent that might be more than a mortgage. But you don’t have the credit or the down payment to buy a house. Apartments are not going down. They are going up. They say houses are better, cheaper. But how are you going to get in a house if you don’t have any money for a down payment?”

    Add in a massive, unprecedented tax on energy and it only gets worse.

    The Heritage Foundation analysis of the Waxman-Markey climate change bill, which focuses primarily on a cap and trade bill to reduce carbon dioxide, estimates a $1500 per year direct tax on household energy use. But that’s just the beginning. The energy tax also hits producers. As the higher production costs ripple through the economy the household pocketbooks get hit again and again. When all the tax impacts have been added up, the average per-family-of-four costs rise by $4,300 per year. In the year 2035 alone the cost is $8,276. And the costs per family for the whole energy tax aggregated from 2012 to 2035 is $116,680.

    You think the $116,680 lost from higher energy prices, all for a temperature change too small to recognize, could have helped with a down payment for Jeanette Reed?

    The real tragedy is that these energy taxes fall disproportionately on the poor. Although upper income families tend to use more energy (and thus emit more carbon per household), since low-income households spend a larger percentage of their income on energy, the poor suffer most. Proponents of a carbon cap acknowledge this, saying, “Relative to total expenditure, however, the poor pay more […]. This means that carbon emission-reduction policies have a regressive impact on income distribution – unless coupled with revenue-recycling policies that protect the real incomes of the poor and middle classes.” Policymakers sought to protect consumers, especially the poor, from higher energy prices by handing out rebate checks or tax cuts. But,

    House Democrats said Friday they plan to auction only 15 percent of the allowances to help lower- and middle-income families pay for higher energy bills. The rest will be given away to a variety of industries and states to ease costs and to help pay for improvements in energy efficiency and investments in clean-energy technology.”

    If only a small portion of the energy tax revenue is given back to the consumer, the burden on the poor obviously becomes heavier. Rebates or not, the higher energy prices would reduce economic activity by forcing businesses to cut costs elsewhere, possibly by reducing their workforce, and thus doing damage that no check would cover.

    Policymakers and business leaders spent weeks behind closed doors negotiating the details of the Waxman-Markey global warming bill, chiefly discussing the distribution of the allowance revenue–the equivalent of tax revenue. Most of it will be given to businesses. Who was representing the consumer?  Who was representing the low income families?

    Posted in Energy [slideshow_deploy]

    9 Responses to Capping the Poor’s Ability to Prosper (Part 9 in a 10-Part Series)

    1. Brad S,, Detroit, MI says:

      Global warming is a hoax. The only advocates of this wild theory that there is such a thing as man-made global climate change have something to gain by making us believe that it is real. Don't pay attention to the man behind the curtain – always look at motive. Ten years from now, when the general populace realizes they have been duped, it will be too late . . . My big problem with this issue is that they are starting to teach this junk to my kids in school !

    2. Dennis, Idaho says:

      Waxman/Markey is really TAXMAN/MALARKEY Higher taxes and BS.

    3. Ray Nations, Hampton says:

      You are correct in your assessment of the "global warming hoax"! Those who believe the melting of the polar ice caps will result in flooding along our coasts are ignorant of science. Remember an iceberg is 80% below water. As the ice melts, it takes up less and less volume. To prove how wrong they are, all one has to do is take a glass and fill it with ice. Then, fill the glass with water. Now, if you believe in global warming and the companion coastal flooding, put the glass in a bucket. If you don't believe in global warming and the coastal flooding, put the glass in your sink. Either way, let the glass sit overnight. The next day, see how much water is in your sink (or bucket). I'd bet the house there is very little water. And, this does not take into effect the massive amount of evaporation that would occur in the oceans if the ice caps melt!

      Gee, maybe this would be a good science project – for a 3rd grader! No one with any intelligence could possibly buy that whole "flooding" thing!

    4. Tim, Kansas City says:

      My question is, what ever happened to global cooling that was all the rage in the 70's, and reported in Newsweek in 1975. Seems strange that we have reversed it in 30 years from global cooling ruining the environment to global warming ruining the environment. Maybe, just maybe these are normal cycles for the earth???

    5. Al, The Villages, Fl says:

      Global Warming (in particular the man made aspect of it) is, indeed, a hoax. There are some environmental nuts who believe the sky is falling and some are in this administration but the biggest hoax of all is that this administration is exploiting the issue to force a cap and trade tax on us all. It does nothing for the people (environmentally nothing and economically damaging) but raises tax revenue for the socialists to spend. I like the analogy of the man taking buckets of water out of the deep end and dumping it in the shallow end and wondering why the pool level is not rising. How long will this administration waste away our resources?

    6. Pingback: Heritage’s Concern for the Poor at Truth Tables

    7. Mark says:

      Isn't it great? Obama now is going to tax the little guy he said he wasn't going to tax by 1300 dollars a vehicle. Take a look at my blog to see what your next vehicle might look like.


    8. Jason, Alabama says:

      Brad – Do you really believe that the vast majority of the world's prominent climate scientists, and nearly every scientific organization in the world, are in on a huge conspiracy?

      Ray Nations – I've got a better experiment for you: Fill a bucket about half full with water. Then, get a small flat object, like a cutting board, and rest it on the edge of the bucket, slightly inclined toward the bucket. Now, pile as much ice as you can on the flat surface. Let that sit overnight, and see if the water level rises. You see, the estimate of sea level rise given by Al Gore and others comes from a scenario in which our planets largest ice sheets (Greenland and Antarctica) melt. These ice sheets are resting on large pieces of land. They are not icebergs floating in the ocean.

      Tim – The supposed "ice age" talk in the 70's was nothing compared to the scientific consensus that exists today. In the 70's, there were a handful of magazine articles and books, and literally no scientific research on the topic of global cooling. At the time, climate science was in its infancy, as far as research goes, and what little had been conducted pointed to warming. Today, we have a plethora of scientific research, an international body of climate scientists, and nearly every scientific organization in the world, all acknowledging the role of industrial activity in increasing global temperatures. In addition, the article in Newsweek that you mentioned mentioned one scientist, Reid Bryson, who is now a "skeptic". Therefore, if you want to point to anyone as being "incorrect", you're looking at a skeptic, not any currently prominent climate scientists.

      I think where so many skeptics go wrong is they believe that this idea that man could cause our planet to warm is a relatively new idea that has been concocted for political purposes to explain our recent warming, after the fact. However, this couldn't be further from the truth. The fact is that the idea was first proposed by a scientist named Arrhenius over 100 years ago, well before any significant warming began. We are only now able to gather and analyze data in an effort to test this theory.

      On top of all of these misunderstandings of climate science, we have the fact that te scientist who conducted the study at MIT, which started this talk of the cost of the recent cap and trade proposal, complaining that his study has been misrepresented for political purposes. He says the numbers in the $3,000 to $4,000 range are a result of very fuzzy math, and aren't even close. His correct analysis results in a much lower figure (about $65).

    9. Jacqueline S. Homan says:

      First off, I must admit that I do not share the same political views expressed by the author of this blog or that of many other commentators because I have issues with the entire capitalist system. However, even though I have never before agreed with the Heritage Foundation on any of their other positions, this cap and trade business is a disaster that I DO agree with Heritage on. I fully agree with them and this blog's author on that. Please allow me to respectfully share my position on this:

      According to the National Energy Director's Association as of 2007, one in twenty US households had their utilities shut off for inability to afford exorbitant home energy bills. As of 2010, there are over five million US households who have lost their gas and/or electric service because they didn't have enough income to afford their bills.

      Since there is a lack of funding for adequate LIHEAP help, only 20% of those who are desperately poor who meet ALL of the stringent eligibility criteria for aid actually get any. That means 80% of those struggling with low wages and sub-poverty fixed incomes (the disabled and the elderly) are turned away. Nobody is talking about the needy who are turned away.

      Let us be generous and gracious and presume that the Waxman-Markey proponents' estimates of a $1,500 direct regressive annual fuel and energy tax is the ONLY hit taken by the poor, for sake of simplicity:

      The average SSI income that the poor disabled and disadvantaged seniors get is about $600/mo. $600/mo = $7,200/year. The federal poverty level for a single individual is about $10,000/year. So those on SSI, as well as many on social security retirement, are already far below the poverty level. Now, a $1,500 direct tax on household energy use (life-sustaining utilities) eats up more than 10% of the incomes of those who are AT the poverty level.

      For the most vulnerable citizens — those struggling to survive on a $600/mo SSI check — this direct tax of $1,500 on home energy would eat up about 21% of their total income. Not counting the normal cost of their utilities which, at present, eats up close to 50% of their total income (without the tax).

      If poor disabled and elderly people on SSI are forced to pay a total of 71% of their total income for basic life-sustaining utilities, how are they supposed to afford food and shelter, never mind any prescription drugs they may need? 71% of $7,200/yr income is $5,112. Now, $7,200 – $5,112 = $2,088. A carbon tax of $1,500/year leaves someone on SSI only $2,088 to afford food and a place to live. There is NOWHERE in the US where you can get a place to live for $2,088/year ($174/mo).

      In Britain, the toll of human misery, suffering and death is already being seen as a result of carbon taxes there, which I wrote about on my blog here:

      No matter how this is spun, cap and trade is an irreparable economic disaster.

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