The Tax Reform Act of 1986¹ provides a significant turnaround in the environmental implications of U.S. tax policy. Congress approved a number of major tax code changes to eliminate subsidies for destruction of wetlands, cultivation of highly erodible lands, and centralized energy facilities.

Until the passage of the Tax Reform Act, the tax code provided many subsidies that had adverse impacts on the environment in energy, agricultural, and land use areas. For example, tax benefits have been provided to individuals for draining wetlands and to utilities for constructing large coal and nuclear power plants.