Is cap-and-trade a tax?

Most of the comments about my cap-and-trade column on the El Paso Times Web site were accusations that cap-and trade is a not-so-hidden tax. That's the refrain of all the antis -Don't be fooled, they say, health care reform is really a tax; cap-and-trade is a tax; every single legislative change is really about taking your hard-earned money.

But is it true? Cap-and-trade would allow utilities that already have clean technologies to sell their carbon allocations to other companies that pollute more, thereby making money. That's right, some companies could be making money! That doesn't sound much like a tax, now does it? Among the predicted winners are utilities that use nuclear energy and renewable energy sources to produce electricity (Among them, Exelon and NRG).

The government could simply mandate the technological changes (All utilities would have to switch to clean energy sources). But oftentimes it is better to "nudge"companies toward the desired behavior with the use of incentives. Cap-and-trade is just such an incentive.