The absurdity is in its dampening of the (ostensible) punishment: you shouldn't be rewarded with a tax deduction for performing an incredible amount of pollution. Instead, you should be both fined and taxed.

It's definitely absurd that you lower your tax basis (i.e. the gains/income-based maintenance obligation we all have to keep the country running) because you paid a fine to offset an externality (which is a cost above, beyond, and unrelated to the maintenance cost of the country).

Yes it is absurd because destroying the environment should not be considered a business expense.

When a cab is fined for speeding, he cannot claim it as a business expense. He put lives at risk and that is not a reasonable business decision. It should be the same for oil spills.

But guess what, tax codes are not written by taxi drivers...

It's absurd that a fine reduces your taxable income. It has very little impact on low-income people, but quite a high one if you're rich.

The argument is that someone rich enough can deduct fines from their tax, but a poorer person can deduct the speeding ticket from their tax. They will also not be able to deduct the lost salary for being locked up from their future tax bill. So this clearly creates an imbalance, rich and poor are treated differently before the law.