Distributional and efficiency Impacts of gasoline taxes: an econometrically based multi-market study

Antonio M Bento (1) , Lawrence H Goulder (2) , Emeric Henry (3) , Mark R Jacobsen (4) , Roger H. Von Haefen (5)

1 Charles H. Dyson School of Applied Economics and Management
2 SIEPR - Stanford Institute for Economic Policy Research
3 ECON - Département d'économie (Sciences Po)
4 Department of Economics
5 ARE - Agricultural and Resource Economics

This article examines the gasoline tax option being proposed in the U.S. in 2005, employing an econometrically based multi-market simulation model to explore the policy's efficiency and distributional implications. Because of its potential to improve the environment and enhance national security, reducing automobile-related gasoline consumption has become a major U.S. public policy issue. Policy impacts both in the aggregate and across households distinguished by income, car-ownership, and other characteristics were examined. Simulation results show that whether a gas-tax increase is regressive in its impact depends on the manner in which the tax revenues are recycled to the economy. The results also reveal significant heterogeneity in welfare impacts within household income groups, thus highlighting the importance of accounting for household heterogeneity in tastes and car-ownership in evaluating distributional impacts.

Domains: Economics and Finance

Antonio M Bento, Lawrence H Goulder, Emeric Henry, Mark R Jacobsen, Roger H. Von Haefen. Distributional and efficiency Impacts of gasoline taxes: an econometrically based multi-market study. American Economic Review, 2005, 95 (2), pp.282-287. ⟨10.1257/000282805774670536⟩. ⟨hal-01045097⟩