Study: Tax cut benefits polluters, ignores environment

Congressional passage of a $790 billion federal tax cut has an enormous price tag for the environment, according to a new study by UW–Madison’s Center on Wisconsin Strategy and Washington, D.C.-based Friends of the Earth.

An estimated $1 billion in new and additional subsidies for polluting industries – including petroleum, chemical and timber interests – are contained within the tax package. The legislation plays a shell game with the federal Superfund law that could jeopardize long-term financing for hazardous waste clean up, according to the study.

Moreover, the tax cuts would substantially reduce incentives for the protection of land from development, say Friends of the Earth and COWS officials.

“Overall, our study finds that the tax bill passed by Congress contains one billion reasons to pollute and further tilts the tax code against clean air and water,” says Brian Dunkiel, an attorney for Friends of the Earth.

The attention paid to partisan squabbling over the propriety of massive tax cuts has ignored the huge tax breaks that undermine environmental protection and natural resource conservation, Dunkiel says.

Among the bill’s provisions highlighted in the study:

• Tax breaks totaling at least $600 million to the oil and gas industry promote resource extraction rather than investments in clean energy sources that do not contribute to global warming.
• About $140 million in increased tax allowances to the timber industry does not regard the forestry management practices of the logging companies benefiting from the taxpayer subsidy.

Transferring nearly $1 billion from the Leaking Underground Storage Tank (LUST) Trust Fund into the Superfund masks depletion of the Superfund and raids other revenue sources rather than reinstate the “polluter pays” tax.

“U.S. taxpayers will pay twice for the polluter tax breaks. Once for the tax break itself and a second time when our air and water is polluted,” says Dunkiel. “The fact that Congress ignored numerous tax breaks for environmental protection proposed by both Republicans and Democrats makes the bill passed even more outrageous.”

The bill contains hundreds of millions of dollars in additional tax breaks for the nuclear power industry and for the construction and expansion of sprawl-supporting highways, says David Wood, COWS’ policy director.

“It’s no surprise that this legislation contains anti-environmental subsidies,” Wood says. “For too long, American public policy has promoted a welfare-for-waste strategy – the costs of which are borne by the environment and by individual taxpayers.

“What Congress has enacted is neither new, nor unique to federal law; tax breaks for environmentally harmful industries are present in Wisconsin’s own tax code,” Wood adds. “What’s more, as our own state budget debate has shown, in the rush to enact tax cuts our elected representatives have ignored important environmental protection programs, not to mention the long-term fiscal security of the state.”

As an example, Wood points to the state Legislature’s failure to continue funding for Wisconsin’s successful community recycling programs. Additionally, under the state’s managed forest tax laws, timber and paper companies reap tax benefits from these totaling $50 million a year. Such tax breaks subsidize the production of timber for papermaking and undercut markets for recycled material.

During consideration and passage of the federal legislation, opportunities to use the tax code to work for the environment were ignored, Dunkiel and Wood say. Bipartisan proposals to encourage the preservation of open space and the development of energy efficient technologies, among others, were excluded. Environmental taxes require no new environmental regulations and may permit significant reductions to taxes on income and property.

Friends of the Earth and COWS are two organizations nationally promoting environmental tax shifts. A copy of their study, “Missing the Green,” may be obtained by visiting: http://www.foe.org.

Founded in 1969, Friends of the Earth focuses on the root causes of environmental degradation and is dedicated to moving government fiscal policies and tax laws more in line with modern environmental concerns. COWS is a research and policy center at UW–Madison dedicated to promoting sustainable economic development. For more information, visit: http://www.cows.org.