Tax Policy’s Role in Promoting Sustainability

Abstract

While the main objective of a tax system is to raise revenue, when a governmental entity chooses to accomplish an economic or social objective or to encourage a certain behavior or activity, it often uses tax law to accomplish that purpose. Tax law has traditionally and increasingly been used to manipulate the economy. In many ways that is a good thing because in our current green economy, tax law is being used to encourage sustainability and to address other environmental concerns at all governmental levels. Unfortunately, tax professionals may not be optimizing the application of these laws for the benefit of their clients. This chapter provides a brief summary of current and proposed tax incentives that are available to most businesses and individuals. It also describes how public accounting firms are tooling their service options to address the evolving public expectation that businesses will be environmentally responsible world citizens.