Who Pays the Carbon Tax?

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

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

But who actually pays the tax?


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

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

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

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

The correct answer to the initial question?

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

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

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

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

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

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

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

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

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

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

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