The Incoherence of U.s. Tax Policy: the Environment As Case Study
Abstract: Abstract: The United States Internal Revenue Code (the Code) is vast, complicated, and at times internally inconsistent. Nowhere is this inconsistency more apparent than the Code’s application to the environment. A survey of contemporary literature and public opinion show an increased awareness of and a recent focus on tax policy tooled for environmental protection. Indeed, though many Code provisions are explicitly environmentally flavored or can be easily seen to have an environmental component, there are many Code provisions that are at apparent odds with a sensible and cohesive environmental policy. The reality is that the Code is a complex stew of sound and unsound public policy, special interests, and situational pressures. This results in a Code that rewards the use of hybrid and electronic plug-in vehicles and encourages commuters to use public transportation and bicycles, while simultaneously promoting the use of motor vehicles with internal combustion engines, rewarding oil exploration and depletion of natural resources, and indirectly promoting urban sprawl. Against this landscape there exist structural and institutional barriers that impede reform. The paper uses just one aspect of the Code – the Code’s uneasy existence with environmental concerns – as the vehicle to evaluate the prospects for reform. This focus on a single area is undertaken with two underlying observations. First, the Code is necessarily complex. A focus on a single area is manageable and serves as a useful case study. Second, the issues we all face as a result of a degraded environment provides the possibility that attention will be paid. The paper will move from the general to the specific, first highlighting the strengths and the weaknesses of the Code, and second, highlighting structural problems that affect tax policy. The aim will be to guide legislators and policymakers toward a sane tax policy.
