In a policy of revenue substitution, the State of New York could increase tax system efficiency while improving environmental quality. Revenue from a state environmental tax on chemical emissions could be used to eliminate pre-existing taxes on business activity. This paper simulates policy implementation and concludes that, in addition to simplifying the state tax code, the revenue-neutral regulation could improve environmental quality, provide a market-based incentive for pollution abatement and maintain the size of the public sector.
Thomas R. Sadler. "Simplifying the Tax Code in New York State: The Case for Environmental Taxation and Revenue Substitution." New York Economic Review. vol. 33, Fall 2002, p. 17-26
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