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How Regressive Are Mobility-Related User Fees and Gasoline Taxes?

In: Tax Policy and the Economy, Volume 37

Author

Listed:
  • Edward L. Glaeser
  • Caitlin S. Gorback
  • James M. Poterba

Abstract

Pigouvian taxes and user fees can address environmental externalities and efficiently fund transportation infrastructure, but these policies may place burdens on poorer households. This paper presents new evidence on the distributional consequences of the gasoline tax, bus and light rail charges and a vehicle miles traveled (VMT) tax. Gas taxes have become more regressive over time, partially because of environmentally-oriented technological change, although the share of expenditures on gas taxes declines with expenditures much less than the share of income spent on gas taxes declines with income. Replacing the gasoline tax with a household-level VMT tax would increase the average tax burden on households in the top income and expenditure deciles, because of their greater use of hybrid-electric and battery-electric vehicles. This progressive shift would be small given current levels of hybrid and electric vehicle ownership, but will be larger in the future if such vehicles continue to be more common among higher than lower income households. An expanded commercial VMT would place a larger burden, as a share of expenditures, on lower income or expenditure households, because better-off households consume more non-tradable goods that do not require transportation. User charges for airports, subways and commuter rail are progressive, while bus fees loom much larger for lower income households.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Edward L. Glaeser & Caitlin S. Gorback & James M. Poterba, 2022. "How Regressive Are Mobility-Related User Fees and Gasoline Taxes?," NBER Chapters, in: Tax Policy and the Economy, Volume 37, pages 1-56, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:14731
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    References listed on IDEAS

    as
    1. James M. Poterba, 1991. "Is the Gasoline Tax Regressive?," NBER Chapters, in: Tax Policy and the Economy, Volume 5, pages 145-164, National Bureau of Economic Research, Inc.
    2. Congressional Budget Office, 2020. "The Distribution of Household Income, 2017," Reports 56575, Congressional Budget Office.
    3. Arik Levinson, 2019. "Energy Efficiency Standards Are More Regressive Than Energy Taxes: Theory and Evidence," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 6(S1), pages 7-36.
    4. Gilbert E. Metcalf, 2023. "The Distributional Impacts of a VMT-Gas Tax Swap," Environmental and Energy Policy and the Economy, University of Chicago Press, vol. 4(1), pages 4-42.
    5. Langer, Ashley & Maheshri, Vikram & Winston, Clifford, 2017. "From gallons to miles: A disaggregate analysis of automobile travel and externality taxes," Journal of Public Economics, Elsevier, vol. 152(C), pages 34-46.
    6. Kurt van Dender, 2019. "Taxing vehicles, fuels, and road use: Opportunities for improving transport tax practice," OECD Taxation Working Papers 44, OECD Publishing.
    7. Lucas W. Davis & James M. Sallee, 2020. "Should Electric Vehicle Drivers Pay a Mileage Tax?," Environmental and Energy Policy and the Economy, University of Chicago Press, vol. 1(1), pages 65-94.
    8. Spencer Banzhaf & Lala Ma & Christopher Timmins, 2019. "Environmental Justice: The Economics of Race, Place, and Pollution," Journal of Economic Perspectives, American Economic Association, vol. 33(1), pages 185-208, Winter.
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    More about this item

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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