Environmental Tax Policy in the United States: A 'Bit' of History

Abstract:     
This article discusses the history of United States' environmental tax policy. Well, not really “environmental” tax policy because only a few decades of “environmental tax policy” history exist. Environmental tax policy addresses the development of new energy sources - “environmentally friendly” energy, and this article analyzes the “non-environmental” tax history of our old energy sources - primarily oil and gas (not “environmentally friendly”). Through an historical analysis of federal tax incentives and subsidies used to build the existing energy industry, the article demonstrates that the United States must provide significant investment incentives in renewable and alternative energy technology if we hope to achieve a sustainable society. This historical analysis chronicles not only the development of tax laws, but also corresponding changes in American life-styles. Americans’ appetite for technology and mobility (highly dependent upon fuel energy) began long before the implementation of the federal tax laws. Yet, substantial government support provided to the burgeoning fossil fuel industry complemented the dramatic changes in the America way of life.

Keywords: tax policy, environment

JEL Classification: K10, K32

working papers series