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Reinstate Superfund Taxes

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

The Superfund program has in past received funding from two sources: general funds from the Treasury and balances in the Superfund trust fund. In earlier years, revenues for the trust fund came from three dedicated excise taxes and an environmental corporate income tax. 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.

Before they expired, the Superfund taxes included an excise tax of 9.7 cents per barrel on crude oil or refined oil products; excise taxes of $0.22 to $4.87 per ton on certain hazardous chemicals; an excise tax on imported substances that use one or more of the hazardous chemicals subject to excise tax in their production or manufacture; and an environmental income tax of 0.12 percent on the amount of a corporation’s modified alternative minimum taxable income that exceeds $2 million. The president would reinstate these taxes beginning January 1, 2013, and expiring after December 31, 2022. During that period, the levies would raise about $21.0 billion.

Proponents of reinstating the Superfund excise taxes argue that imposing these taxes is consistent with a “polluters pay” principle: industries and companies that used hazardous substances and purchasers of products that generate hazardous wastes should bear the cleanup costs. Proponents also argue that the Superfund taxes may discourage the use of toxins and, ultimately, hazardous waste. But the pollution in question is legacy contamination, so the incidence is unlikely to reach culpable parties. In addition, 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 current waste (“waste end” taxes) would be more efficient. The corporate income tax component of the Superfund taxes would contribute additional revenues for cleanup activities, but it is extremely complex, requiring firms to compute a corporate AMT liability even if they do not owe any tax. And, in contrast to the excise taxes, the amount of corporate environmental income tax has no connection to the source of current or prior pollution.

Additional Resources

Congressional Research Service, Report on Superfund Taxes (CRS Report RL31410).