Taxing Polluters an Easy Target

Taxing Polluters An easy target for many politicians when it comes to taxation, are the big bad American corporations. Politicians tout the supposed fact that corporations make so much money they can afford to give some of it back to the government. Those same politicians conveniently forget to mention the fact that those corporations already pay a lion's share of the taxes imposed by government, and not only do they pay all those taxes, but they also provide jobs, economic growth and investment capital and opportunities.

So now the question being bandied about is whether corporations should be taxed according to the amount of pollution generated by their particular corporate activities. This question immediately raises many concerns, but delving deeper it might actually make some sense to at least contemplate this approach. Currently the U.S. tax code allows many polluters to take advantage of the fact that they are polluting the environment.

"Some of the worst offenders in polluting the environment and depleting natural resources are frequently allowed to benefit from special tax treatment in the U.S." (Kripke 1998-page 9) Instead of providing an incentive for corporations to invest their capital and their knowledge in creating jobs, or expanding their business, the U.S. tax code taxes those economically viable activities and then provides an incentive for those same corporations to participate in activities that produce an end result of polluting the environment.

This is totally backwards from the way that it should be. That situation seems to be changing. As early as 1997 experts were expressing the view that the pollution emitters should be charged for their emissions. "There is growing support for a new pollution-fighting approach that harnesses rather than resists market forces.

The idea -- embraced by economists and fiscally shrewd environmentalists -- is to charge polluters for each unit of pollution they emit." (Coy 1997-page 144) It is probable that as the tax code is switched from one approach to the other many corporations will embrace those changes as long as it does not affect their bottom line(s). This can be done by easing taxes on other corporate activities such as; investments and job creations.

Kripke states; "Polluters who cause environmental damage can fully deduct all costs related to illegally released pollution, including cleanup costs." This is not the type of incentive corporations need. If corporations are illegally releasing pollution, then the corporations should be penalized, not rewarded. Corporations, in turn, should be rewarded for being environmentally conscious and for participating in such activities as creating jobs, investing capital and various other sound fiscal policies.

In the past decade there have been a number of experts that have commented on this discrepancy in the tax code and its seeming perversity.

"Economists increasingly embrace the proposition that our tax system perversely raises the price of "good" economic activities like investment and employment that we would like more of, while we keep low the price of "bad" economic activities, like pollution, that we would like less of." (Morris 2005) It would seem to make sense, therefore, to call on corporations to cooperate with their local communities in regards to the pollution they are emitting into the atmosphere.

The men that run those corporations are businessmen and oftentimes view their world through eyes that are sharply focused on the bottom line. If this is true in the corporate world, then one method of approaching the problem is by looking at the taxation issue through their eyes.

Will ignoring any pollution problem be beneficial to the community? Most businessmen would probably answer that question with a negative, but does that mean they feel compelled to do anything about the problem, even if their corporation was the one that caused it. Currently the answer would be no, but if they were going to be penalized for not doing so, and that penalty was coupled with an incentive for accomplishing the objective, then it would probably be a no-brainer, even based on the businessman's viewpoint.

Peter Coy states; "A few polluters that cannot easily reduce emissions will pay a substantial cost, but those with the technology to cut emissions cheaply will have a far greater incentive to do so than they would have under traditional regulation." The same technology used to accomplish a cleanup, can also be used for other reasons, which is an additional benefit to the corporations. Another benefit derived from changing the tax code, is that the tax code itself will become an instrument of 'good'.

Instead of providing individuals and corporations with incentives to commit 'bad' acts, the tax code could be used to reward 'good' acts, and punish 'bad' acts. Many experts agree with this statement including J. Andrew Hoerner, the director of research at Redefining Progress (an online Public Affairs Institute) who states; "By taxing activities we want to discourage such as waste and pollution, the tax system can be made to do double duty.

Not only does the revenue serve the public interest, but the tax does too." It would seem, therefore, that the idea of taxing corporations according to the amount of pollution the corporation is generating would be a relatively good idea. The tax would most likely need to be offset by a reduction in other corporate taxes in order to be palatable to the business community, but this is actually a good thing, because then the entire taxation approach is changed.

It changes from a method almost guaranteed to engender pollution and its ensuing problems,.