Chapter 5: Environmental Taxation in the United States: Retrospective and Prospective
Janet E. Milne* The fight against pollution . . . is not a search for villains. For the most part, the damage done to our environment has not been the work of evil men, nor has it been the inevitable by-product either of advancing technology or of growing population. It results not so much from choices made, as from choices neglected; not from malign intention, but from failure to take into account the full consequences of our actions. Quite inadvertently, by ignoring environmental costs we have given an economic advantage to the careless polluter over his more conscientious rival. President Richard M. Nixon, 19701 1. INTRODUCTION In 1920, A. C. Pigou quietly launched the effort to use tax systems to address environmental problems with his statement that it is “possible for the State, if it so chooses, to remove the divergence in any field [between trade and social net product] by ‘extraordinary encouragements’ or ‘extraordinary restraints’ upon investments in that field,”2 citing taxes as an example.3 Although not confined to environmental problems, his concept has become synonymous with the principle of internalizing environmental externalities. Taxes that increase the cost of environmentally damaging activities can serve as “extraordinary restraints” that bring the external environmental * The author expresses her appreciation to Richard Cullen for organizing the conference that generated this chapter. A modified version of this chapter was published in Lewis & Clark Law Review, Volume 15, Issue 2, 2011. 1 President Richard Nixon, Special Message to the Congress on Environmental Quality, February 10, 1970...
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