House Democrats are proposing a new energy tax as a means of financing their $3.5 trillion ($3,500,000,000,000) tax and spending spree, according to a fact sheet released by Democrats on the House Energy & Commerce Committee.
The tax will automatically ratchet up each year at a rate of 5% above inflation. This is a tax increase on autopilot without congress having to hold a vote on it each time.
The plan would impose a regressive carbon tax on methane emissions from oil and gas development, likely amounting to a tax increase of $10-$15 billion annually. This tax will be paid for by American households in the form of higher energy bills and higher costs of everyday products. A recent letter to Congress from the American Gas Association warned that the methane tax would amount to a 17% increase on an average family’s natural gas bill.
This tax increase would violate President Biden’s pledge not to raise any form of tax on anyone making less than $400,000 per year. Officials within the administration have repeatedly stated taxes that raise consumer energy prices are in violation of President Biden’s $400,000 tax pledge.
A recent Reuters story on Democrats’ proposals for new energy taxes even detailed how “the White House is concerned the Democrats’ proposal will raise prices on a host of consumer goods, from cars to appliances, and conflict with Biden’s pledge not to tax any American earning less than $400,000 per year.”
The Democrat proposal is modeled off of legislation introduced earlier this year by Sen. Sheldon Whitehouse (D-R.I.) that would tax methane starting at a rate of $1,800/ton and then set to increase on autopilot at 5% above inflation annually.
Once this tax mechanism is in law, Democrats will gradually add other greenhouse gases and build a full-fledged carbon tax regime, with the cost burden shouldered by American households.
The same legislation also includes a market distorting import tax on crude oil and natural gas from other countries that would further increase consumer costs and likely lead to retaliatory actions from American trading partners in the form of tariffs and import taxes of their own.