Brief Eliminating Tax Expenditures with Adverse Environmental Effects
Eric Toder
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Tax expenditures are provisions in the U.S. federal tax code that provide special tax benefits for selected economic activities or taxpayers. A number of tax expenditures add to greenhouse gas emissions by encouraging production and consumption of fossil fuels. This policy brief examines four tax expenditures that increase consumption of fossil fuels. Eliminating or scaling back these and other tax expenditures that promote production and consumption of fossil fuels would reduce the budget deficit, promote economic efficiency, and be a first step toward making the tax law more environmentally friendly. However, the effects of the proposed tax reforms on greenhouse gas emissions would be smallso addressing tax expenditures can be only one part of a broader strategy to reduce climate change.
Policy Centers Income and Benefits Policy Center