The Constitutional Grounding for Environmental Taxation in the United States
Aspectos Constitucionales Controvertidos De La Tributación Ambiental/Controversial Constitutional Aspects of Environmental Taxation, Rodolfo Boix, ed. (2017)
15 Pages Posted: 30 Nov 2017 Last revised: 11 May 2019
Date Written: November 22, 2017
This chapter of Constitutional Aspects of Environmental Taxation discusses the basis in the U.S. Constitution for the federal use of Pigouvian taxes and subsidies to manage natural resources and the environment. First, the chapter provides an overview of the dual system of state and federal governments, the state delegation of limited authority to the federal government under the U.S. Constitution, and the limitations on federal power under the Bill of Rights. Second, it outlines the role of the Commerce Clause as authority for Congress to enact environmental regulation and discusses the limits on that authority based on Tenth Amendment federalism concerns and the Fifth Amendment Takings Clause. Third, the chapter identifies a second source of constitutional authority for Congress to use environmental taxation: the Taxing Power. The chapter identifies the Taxing Power’s scope, uses and limitations. It provides examples of excise and other taxes designed to generate revenue that may also benefit the environment, examples of income and other tax provisions that directly or incidentally harm the environment, and examples of tax subsidies designed to aid the environment. Finally, the chapter recounts the constitutional case law that insulates tax subsidies and Congressional decisions about the use of tax revenues from challenge.
Keywords: environmental taxation, constitution, taxing power, commerce clause
JEL Classification: K32, K34
Suggested Citation: Suggested Citation