Environmental Economics

Impact of the Federal Tax Code on Resource Recovery

This report assesses the extent to which a variety of Federal tax subsidies to extractive industries affect the materials flow in competing secondary industries. The impacts of tax subsidies on virgin material supply curves for the steel, paper, lead, copper, and aluminum industries are analyzed in detail. The flows of virgin and secondary materials industries are analyzed in detail. The flows of virgin and secondary materials industries are characterized at points where the two materials substitute as inputs to production and consumption. Econometric models specified at these points of substitution are used to analyze the impacts of the tax subsidies on the quantities of secondary materials which are recycled. Within the limits of existing plant and equipment, the authors estimate that elimination of tax subsidies to virgin material industries would increase the flow of scrap steel by 0.42 percent, of wastepaper by 0.67 percent, of lead by 0.75 percent, of copper by 0.35 percent, and of aluminum by 1.7 percent. These estimates make no allowance for the long-run effects on investment which may arise from the subsidization of one of two competing industries. When investment effects and other Federal policies (especially Interstate Commerce Commission regulation of freight rates, labeling requirements for scrap-based products, and the free access to minerals on Federal lands) are also considered, the authors believe that the cumulative adverse impact on recycling may be far larger than the relatively modest effects measured in this report.

  • Keywords

    4. Economic Incentives and Other Innovative Approaches
    4. Economic Incentives and Other Innovative Approaches - Subsidies
    Environmental Media:
    c. Land
    c. Land - Solid Waste/RCRA
    Anderson, Robert C.
    Spiegelman, Richard D.
    EPA Project Officer/ Manager:
    Geographic Area:
    United States
    Study Purpose:
    Policy Evaluation
    Inventory Record #: EE-0361
  • Participating Organizations

    Research Organization:

    Environmental Law InstituteAddress:
    City: Washington State: DC ZIP: 20036
    Phone: Fax:
    Funding Organization:
    Environmental Protection Agency, Office of Research and Development, Office of Air, Land and Water UseAddress:
    City: State: ZIP:
    Phone: Fax:
  • Report Details
    Number of Pages:
    EPA #:
    NTIS #:
    Grant/Contract #:
  • How to Obtain Report

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    Date Linked: 05/28/2009
    Other Ways to Obtain the Report:
    You may be able to obtain this report by contacting the National Technical Information Service (NTIS):
    By phone: 1-800-553-6847 or 703-605-6000;
    By mail: NTIS, Department of Commerce, 5285 Port Royal Rd., Springfield, VA 22161;
    By World Wide Web: [http://www.ntis.gov].
    You will need the following NTIS report #: PB264886