Reinstate the Superfund Taxes

The Superfund program and its associated trust fund were established in 1981 to clean up the nation's worst hazardous waste sites. By statute, the cost of cleanup is to be borne by the parties responsible for the contamination, but the Environmental Protection Agency (EPA), which administers the program, pays for the cleanup when liable parties cannot be identified, no longer exist, or are unwilling or unable to undertake the job.

EPA-led cleanups and other Superfund activities are funded by an annual appropriation, which lawmakers designate as having two sources: One portion comes from the general fund of the Treasury, and the other portion is drawn from balances in the program's trust fund. In 2010, the total appropriation was $1.3 billion, and net outlays were $1.0 billion.

Originally, revenues designated for the trust fund were derived mainly from taxes on petroleum and various industrial chemicals and from a corporate environmental income tax. However, authorization for those taxes expired in December 1995. The trust fund continues to receive some money from liable parties who pay interest and penalties and reimburse EPA for its cleanup costs; but the program is now financed largely from the general fund.

This option would reinstate the taxes that expired at the end of 1995: the Superfund excise tax of 9.7 cents per barrel of crude oil or refined oil product, an excise tax of $0.22 to $4.87 per ton on various chemicals, and a corporate income tax of 0.12 percent on corporations' modified alternative minimum taxable income above $2 million. (The latter is computed by disallowing certain tax preferences allowed under the regular corporate income tax and by making other adjustments, both positive and negative, to the firm's taxable income.) Together, those taxes would yield revenues of $9 billion between 2012 and 2016 and $19 billion from 2012 through 2021. (Because excise taxes reduce the tax base of income and payroll taxes, additional excise taxes would lead to reductions in revenue from income and payroll taxes. The estimates shown here reflect those reductions.)

An argument in favor of the option is that reauthorizing the dedicated taxes to finance the Superfund program, rather than continuing to rely on general funds, is more consistent with the principle that entities that contribute to pollution should pay to clean up the resulting problems. Because petroleum products and various chemical feedstocks and derivatives are common sources of contamination at Superfund sites, and because hazardous chemicals are used by many medium-sized and large corporations, having producers and users of those substances-- as well as corporations more broadly--pay much of the cleanup bill would be fairer than having all taxpayers bear those costs. A second rationale is that having a stable source of funding would help maintain EPA's long-term efforts at the worst sites and continue to give responsible parties reason for concern that EPA will conduct its own cleanups and seek to recover the costs from them if they do not undertake the work themselves.

An argument against the option is that taxing all companies in an industry or all corporations above a particular size, regardless of those companies' past or current waste- disposal practices, would not provide incentives for companies to handle waste carefully or, in fact, to avoid creating it in the first place. Instead, companies would be subject to the tax without regard to their role in creating future hazardous waste sites. The tax would distort economic decisions, thus hampering rather than promoting efficiency. Another argument against the option is that it could unfairly tax current stakeholders of a business (its customers, employees, and investors) who were not responsible for and did not benefit from earlier polluting activities.

A third argument against the option is that some research spending (including spending from the trust fund) has indicates that the administrative and compliance costs of always been subject to annual appropriations, dedicated such levies are out of proportion with the relatively small taxes would provide no guarantee of stable funding. amounts of revenue they raise. Also, because Superfund