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How large are tax subsidies to motor-vehicle users in the US?

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  • Delucchi, Mark A.
  • Murphy, James J.

Abstract

There has been considerable discussion about the extent to which motor-vehicle use in the US is "subsidized," making petroleum-based motor vehicle use more attractive than other transportation modes. Estimates of these subsidies vary widely, and in many cases can be criticized on methodological grounds. In this paper we estimate corporate-income-tax, sales-tax, property-tax, and personal-income-tax subsidies related to motor-vehicle use. Whereas previous estimates of sales-tax and corporate-income-tax subsidies have been built piecemeal, tax provision by tax provision, we offer an alternative method, based on the difference between actual tax payments of the motor vehicle industry compared to other industries. We estimate that the total "tax subsidy" to motor-vehicle users in the US may be in the range of $19-64 billion (109) per year, or $0.11-0.37 per gallon ($0.03-0.10 per liter) of motor fuel. However, the amount of the subsidy, and hence the magnitude of its effect, depends greatly on the tax baseline with respect to which the subsidy is estimated. (The property-tax subsidy is particularly uncertain.) We emphasize that without doing a full equilibrium analysis, we cannot say how eliminating these subsidies would affect social welfare.

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Bibliographic Info

Article provided by Elsevier in its journal Transport Policy.

Volume (Year): 15 (2008)
Issue (Month): 3 (May)
Pages: 196-208

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Handle: RePEc:eee:trapol:v:15:y:2008:i:3:p:196-208

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  1. Murphy, James & Delucchi, Mark, 1998. "A Review of the Literature on the Social Cost of Motor Vehicle Use in the United States," Institute of Transportation Studies, Working Paper Series, Institute of Transportation Studies, UC Davis qt1tk1s936, Institute of Transportation Studies, UC Davis.
  2. Shoup, Donald C. & Willson, Richard W., 1992. "Employer-Paid Parking: The Problem and Proposed Solutions," University of California Transportation Center, Working Papers qt2x6240jr, University of California Transportation Center.
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Cited by:
  1. Hirte, Georg & Tscharaktschiew, Stefan, 2013. "The optimal subsidy on electric vehicles in German metropolitan areas: A spatial general equilibrium analysis," Energy Economics, Elsevier, Elsevier, vol. 40(C), pages 515-528.
  2. Tscharaktschiew, Stefan & Hirte, Georg, 2011. "Should subsidies to urban passenger transport be increased? A spatial CGE analysis for a German metropolitan area," Dresden Discussion Paper Series in Economics, Dresden University of Technology, Faculty of Business and Economics, Department of Economics 01/11, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
  3. Delucchi, Mark A. & McCubbin, Donald R., 2010. "External Costs of Transport in the U.S," Institute of Transportation Studies, Working Paper Series, Institute of Transportation Studies, UC Davis qt13n8v8gq, Institute of Transportation Studies, UC Davis.
  4. Jacobson, Mark Z. & Howarth, Robert W. & Delucchi, Mark A. & Scobie, Stan R. & Barth, Jannette M. & Dvorak, Michael J. & Klevze, Megan & Katkhuda, Hind & Miranda, Brian & Chowdhury, Navid A. & Jones, , 2013. "Examining the feasibility of converting New York State’s all-purpose energy infrastructure to one using wind, water, and sunlight," Energy Policy, Elsevier, Elsevier, vol. 57(C), pages 585-601.

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