Is the gasoline tax regressive in the twenty-first century?

The Resource Is the gasoline tax regressive in the twenty-first century?

Label

Is the gasoline tax regressive in the twenty-first century?

Statement of responsibility

Jordi J. Teixidó, Jordi J.; Stefano F. Verde

Language

eng

Summary

Poterba (1991a) has much influenced the literature on the distributional effects of carbon pricing. The gist of Poterba’s study is that the distributional incidence of energy/environmental taxes across households is better appreciated if the relative tax burdens are measured against total expenditure instead of annual income. Interpreted as a proxy for lifetime income, total expenditure is more stable over time. As a result, the incidence of energy price increases is less regressive than when annual income is used. This outcome is often taken to lessen the relevance of equity concerns regarding carbon pricing. Almost twenty-five years after Poterba (1991a), Piketty (2014) revived the idea that wealth is a dimension of economic welfare constituting an increasingly important source of inequality. We show that omitting wealth in measuring ability to pay means underestimating the regressivity of carbon pricing and its inequity towards younger people. Using household-level data and statistical matching, we revisit Poterba’s application and compare the distributional incidence of the US federal gasoline tax for different measures of ability to pay: total expenditure, income and wealth-adjusted income

Index

no index present

Literary form

non fiction

Series statement

EUI working papers. MWP
EUI papers

Series volume

2016/19

Context

Context of Is the gasoline tax regressive in the twenty-first century?

Structured data from the Bibframe namespace is licensed under the Creative Commons Attribution 4.0 International License by European University Institute Library. Additional terms may apply to data associated with third party namespaces.

Context

Work of