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2010 Budget Tax Proposal

Reinstate Superfund taxes

The Superfund trust fund is used to clean up contaminated sites. Parties found liable for contaminating the sites generally bear the cost of Superfund cleanups. The Superfund trust fund covers the costs when liable parties no longer exist or either cannot or will not undertake a cleanup.

The Superfund program receives funding from two annual appropriations: general funds from the Treasury and balances in the Superfund trust fund. In earlier years, revenues for the trust fund came from three dedicated taxes (on petroleum, chemical feedstocks, and corporate income). Those taxes expired in December 1995, however, and the amount of unobligated money in the fund gradually declined to zero by the end of fiscal year 2003. The Superfund trust fund has been funded almost entirely through general revenues ever since.

The president proposes to reinstate Superfund taxes without specifying any details. When they expired at the end of 1995, Superfund taxes included 1) an excise tax of 9.7 cents per barrel on crude oil or refined oil products; 2) excise taxes of $0.22 to $4.87 per ton on certain chemicals; and 3) an excise tax on imported substances that use one or more of the hazaradous chemicals subject to excise tax in their production on manufacture.  The three Superfund taxes would be reinstated on January 1, 2011.  The proposal would also reinstate the superfund environmental income tax of 0.12 percent on the amount of a corporation's modified alternative minimum taxable income that exceeds $2 million.

Proponents of reinstating the Superfund taxes argue that imposing these taxes is consistent with a “polluters pay” principle: industries and companies that used hazardous substances should bear the cleanup costs. But the taxes are passed forward to consumers in all likelihood.  Further, the pollution in question is legacy contamination, so the incidence is unlikely to get at culpability. Proponents also argue that the Superfund taxes may discourage the use of toxins and, ultimately, hazardous waste. However, the taxes may distort economic behavior without giving businesses an incentive to handle hazardous wastes more carefully or avoid producing them. Taxes placed directly on waste (“waste end” taxes) would be more efficient. The corporate income tax component of the Superfund taxes is extremely complex. Firms had to compute a corporate AMT liability even if they did not pay the tax.

Additional Resources
Superfund Taxes or General Revenues: Future Funding Issues for the Superfund Program, Jonathan L. Ramseur, Mark Reisch, and James E. McCarthy, Congressional Research Service, Report RL31410, February 2008