Green Ride: Tax Incentives to Promote Sustainability

Governments across the globe use tax deductions, credits, and penalties for a wide variety of reasons. One set of goals of these governmental tools is to incentivize production and purchase of environmentally sustainable products and discourage the production and purchase of less sustainable goods. This case provides a realistic context in which to demonstrate and consider the use of tax incentives to promote sustainable technology. The case study challenges students to analyze two hypothetical tax proposals facing a company to encourage production of alternative fuel vehicles that would run on sustainable biofuels. Student responses provide the basis for small group and class discussion, and insights into the use of tax incentives to achieve public policy objectives.