Taxation

Ca. Tax Lawyer Summer 2015, Volume 24, Number 2

Environmental Tax Incentives: What the United States Can Learn from the Netherlands and Japan1

By Kali Waller2

I. INTRODUCTION

National economic strength and well-being are critical to advancing the quality of life of citizens. Given the challenge of global climate change, future economic productivity depends on both improving energy reliability and mitigating adverse effects to the environment.3 By utilizing tax incentives and conserving power through energy efficiency, the energy economy will become stronger and more competitive. This article studies environmental tax regimes created by the United States, Netherlands, and Japan, and discusses the best practices from each that can be applied to future tax incentive programs in the United States. Raising revenue and regulating behavior are the two main benefits of tax incentives,4 making them an ideal form of environmental regulation.

This article explores policy developments in the United States, Netherlands, and Japan, and identifies elements possessed by the most successful environmental tax schemes: simplicity, cost-effectiveness, and culture-specificity. These countries offer a diverse view of Western and Eastern culture and tax paradigms. Each country has a distinct way of managing taxes while implementing programs that encourage environmental reform.5 Additionally, the culture in each country is unique, making tax implementations and management particular to each.6

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