The Power Of Taxing “Untaxed Externalities” [Video]

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If you are a regular CleanTechnica reader, you are familiar with the term “untaxed externalities,” which economists use to describe financial impacts of human behavior that are not figured into the costs of doing business. Here’s an example. Let’s say you are in the business of drilling holes in the Earth looking for oil or methane. All wells stop producing eventually and need to be capped. But decommissioning old wells costs money, so you set up a shell corporation to buy your old wells.

You go about your business of drilling more wells and a little while later, the shell company declares bankruptcy. Now the burden of capping those old wells falls on the taxpayers. Congratulations! You have successfully made the cost of cleaning up your mess an untaxed externality. Your balance sheet shows more profits from your operations than it should because you …