Is Cap and trade considered a tax?



  1. 0 Votes

    No. A tax is a fee that is levied onto a person or entity and it is generally non-negotiable. The cap and trade system works differently. First, it sets a cap of how much people are allowed to pollute. The amount they are allowed to pollute is based on how many “credits” they have. If a company needs to pollute more than they have credits for, they have to buy credits off of companies that do not need to use all their credits. As such, the company “pays” to pollute beyond its initial limit. However, this is not a tax because the company itself is making the decision to spend more to pollute, much like how I may decide to pay more to super-size a meal at McDonnalds; we wouldn’t call the extra cost of getting more, a tax.

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