Stanford University researchers discovered that it is ultimately people – not corporations – who bear the cost of climate change regulation. According to the folks at Stanford, under a hypothetical carbon tax, households in the lowest income group would pay as a percent of income more than twice paid by households in the highest 10% of income distribution.

people, not corporations, bear the cost of climate change regulation

I’m not sure why they are surprised. Consumers ultimately shoulder the burden of virtually any new regulation. Carbon taxes are no different. In today’s economy, investors (they are people, too) demand a level of business financial performance that virtually compels any and all increases in business operating expenses be passed on to the consumer. Since we all pay the same bulk rate for electricity, for example, and the carbon tax would target electricity generation; on a percentage basis, lower and middle income people would indeed be hit the hardest.

So back to the topical question: How much do corporations pay for environmental compliance? It’s a bit of a trick question. The answer is “nothing.” The corporation’s investors and the consumers would pay the carbon tax. Monies that could go to reducing existing operating expenses, power company infrastructure improvements, and even return on investor capital will be “taken” and “used” by our elected and unelected officials for other purposes.

About the Author

Gerald L. Kirkpatrick, P.G. is a Principal Geoscientist and the Managing Partner of Environmental Standards, Inc. Mr. Kirkpatrick has more than 30 years of applied environmental geoscience experience in both private industry and environmental consulting. Outside of work, Gerry enjoys fishing and an occasional single malt. A very poor chess player, he remains dedicated to the game, nonetheless.