Conor Clarke has the specifics on the tax burdens from the proposed Cap and Trade legislation

This does a fair bit to alleviate some of my worst concerns about cap and trade, that even after the rebate the excess burden would leave lower income households worse off. In answer to Conor’s query:

But families in the second highest quintile will end up with an additional burden of $340 a year — more than the wealthiest Americans. How to make sense of this?

My guess is that middle income American’s bear the highest burden because carbon usage levels off as income rises, while average income increases exponentially as one moves up the percentile. My “graph” such as it is:
See update below

 

 

 

Unfortunately, since Cap and Trade has emerged I have become concerned about its ability to pass a Cost Benefit test even sans-distributional concerns. At this point it seems to me that the onus is on Cap and Trade proponents to show that this is generally worthwhile. The back of the envelope calculations don’t look good.

 

UPDATE: After actually skimming the report I realized I was totally off. The burdens are not percentage of income but percentage of tax collected. (I could have also noted this by reading the axes on Conor’s graph)

So here is the real story. Upper income households get a big benefit in the form of business tax relief which offsets the increased costs they face from cap and trade. Upper middle income households don’t get nearly as much business relief and so their total burden is higher.