Taxing Effort


Americans already suffer the highest tax burden in U.S. history, but President Clinton has proposed a massive tax increase: $245 billion over the next five years. A big chunk of this new revenue will be produced by a broad energy tax based on British thermal units (BTUs). A BTU is the amount of energy required to heat a pound of water one degree Fahrenheit when the water is at 39.2 degrees. Different forms of fuel have different costs per BTU.

Despite Clinton's pledge to tax the rich, a BTU tax, like most energy taxes, will fall disproportionately on lower-income earners. If Clinton's plan is enacted, people earning under $10,000 annually will pay five times more, as a percentage of their income, than those earning over $50,000.