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Distributional effects of a vehicle miles traveled tax over the different vehicle efficiency

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  • Cheon, Jiyeon

Abstract

This paper examines the distributional effects of a Vehicle Miles Traveled (VMT) tax, focusing on the increasing adoption of electric vehicles (EVs) in the United States. Using a two-period model that integrates decisions on vehicle selection and subsequent driving behavior, the study evaluates short-term changes in consumer surplus resulting from replacing a gasoline tax with a VMT tax. The results suggest that a revenue-neutral VMT tax could modestly increase consumer surplus by approximately $2 per vehicle annually. The analysis also reveals that a uniform federal VMT tax rate leads to varying outcomes across states. Furthermore, the findings demonstrate that the policy’s efficiency improves with higher EV adoption rates. Specifically, when EVs account for 5% of the market share, the additional consumer surplus generated by EV adoption is twice the surplus achieved through a revenue-neutral VMT tax.

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  • Cheon, Jiyeon, 2025. "Distributional effects of a vehicle miles traveled tax over the different vehicle efficiency," Economics of Transportation, Elsevier, vol. 41(C).
    • Handle: RePEc:eee:ecotra:v:41:y:2025:i:c:s2212012225000024
    DOI: 10.1016/j.ecotra.2025.100394
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    Keywords

    VMT tax; Gas tax; EVs;
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