One approach to environmental protection involves creative use of taxes. Traditionally, we tax many of the things we value; we levy taxes on paychecks, income, property, sales, and businesses. But because taxation tends to discourage productive activity, why not use the power to tax for what it is: a reverse incentive? Why not, many argue, tax that which we do not value, such as pollution, congestion, sprawl, and resource depletion? Nine European governments do just that: Reducing taxes on the “goods,” they instead tax the “bads,”

like toxic waste. This is called “tax shifting.” A “green tax” is one that uses government taxing power to build sustainable economies and benefit the environment.

Internet Assignment Find an example of green taxes or environmental tax shifting, both in the United States and abroad. Compare the two. Which seems to offer the most promising solution? Which scheme generates “the greatest good for the greatest number”?

Consider these three means of controlling air pollution:

• Fines levied on companies that exceed set emission levels

• Taxing emissions

• Allowing a tradeable permit system for emissions Compare and contrast the three approaches. Which would you want in your neighborhood?

Which would you favor if you owned a polluting business?