They often are partially recycled material. But recycled paper isn't like recycling aluminum or steel. There are limits to how often and how much of the cycled material you can add back to make useful paper products.

But paper towels can and does make great compost as most gardeners know. And a properly run landfill is a compost pile. But you need to keep the nasty garbage out.

Because the landfills produce methane, a greenhouse gas much more potent than CO2. Once a landfill is closed, the methane can mostly be caught. There are always leaks, however. Containing the methane and other problems creates forever-costs. Recycling as much as possible and burning the rest, greatly reduces the problem. Remaining ash from burning still needs to be stored, but has less volume. And while burning trash does produce CO2, the energy is used for electricity and communal heating.