Daily Chart: How Progressive is Cap and Trade?

Is cap and trade going to screw the poor? Turns out there is some debate about this. You have the Tax Foundation going on about how the costs of cap and trade will be "disproportionately borne by low-income households," and Warren Buffett saying that cap and trade is "probably going to be pretty regressive." And then you have the CBO's weekend estimate of what cap and trade will cost the individual families, which both Kevin Drum and Matt Yglesias use to make the point that poor families will actually do pretty well.

The estimate says that the average family will face additional costs of about $165. Families in the lowest quintile will actually see a benefit of $40, largely because some portion of the revenue will be used to fund a rebate and tax credit for low income families. Families in the top quintile will pay an extra $245 dollars a year. That looks pretty progressive. 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?

This article available online at:

http://www.theatlantic.com/business/archive/2009/06/daily-chart-how-progressive-is-cap-and-trade/19834/