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Who Pays Broad-Based Energy Taxes? Computing Lifetime and Regional Incidence

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  • Nicholas Bull
  • Kevin A. Hassett
  • Gilbert E. Metcalf

Abstract

This paper measures the incidence of energy taxes using a lifetime framework to study both a Btu tax and a carbon tax. It takes into account two key facts. First, because energy taxes have different incidence effects across the life cycle, it is important to measure the burden of taxes in terms of lifetime incidence, not just their burden in a given year. To take account of lifetime incidence, we introduce an estimation methodology for lifetime-correction as well as showing current consumption measures. Second, energy taxes have a total effect that combines both direct and indirect effects: in addition to directly increasing the price of energy goods, energy taxes also indirectly increase the price of all other goods in proportion to the energy used to produce them. We provide incidence estimates by income group and by geographical region.

Suggested Citation

  • Nicholas Bull & Kevin A. Hassett & Gilbert E. Metcalf, 1994. "Who Pays Broad-Based Energy Taxes? Computing Lifetime and Regional Incidence," The Energy Journal, , vol. 15(3), pages 145-164, July.
    • Handle: RePEc:sae:enejou:v:15:y:1994:i:3:p:145-164
    DOI: 10.5547/ISSN0195-6574-EJ-Vol15-No3-8
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    References listed on IDEAS

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    1. Milton Friedman, 1957. "Introduction to "A Theory of the Consumption Function"," NBER Chapters, in: A Theory of the Consumption Function, pages 1-6, National Bureau of Economic Research, Inc.
    2. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1, August.
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    2. Parry, Ian W.H. & Sigman, Hilary & Walls, Margaret & Williams, Roberton C., III, 2005. "The Incidence of Pollution Control Policies," Discussion Papers 10651, Resources for the Future.
    3. Gilbert E. Metcalf & Don Fullerton, 2002. "The Distribution of Tax Burdens: An Introduction," NBER Working Papers 8978, National Bureau of Economic Research, Inc.
    4. Gilbert E. Metcalf, 1998. "A Distributional Analysis of an Environmental Tax Shift," Discussion Papers Series, Department of Economics, Tufts University 9801, Department of Economics, Tufts University.
    5. Don Fullerton & Gilbert Metcalf, 2002. "The Distribution of Tax Burdens," Discussion Papers Series, Department of Economics, Tufts University 0201, Department of Economics, Tufts University.
    6. A. Lans Bovenberg & Lawrence H. Goulder, 2001. "Neutralizing the Adverse Industry Impacts of CO2 Abatement Policies: What Does It Cost?," NBER Chapters, in: Behavioral and Distributional Effects of Environmental Policy, pages 45-90, National Bureau of Economic Research, Inc.
    7. William G. Gale & Samuel Brown, 2013. "Tax Reform for Growth, Equity, and Revenue," Public Finance Review, , vol. 41(6), pages 721-754, November.
    8. Gilbert E. Metcalf & Sergey Paltsev & John Reilly & Henry Jacoby & Jennifer F. Holak, 2008. "Analysis of U.S. Greenhouse Gas Tax Proposals," NBER Working Papers 13980, National Bureau of Economic Research, Inc.
    9. Burtraw, Dallas & Sweeney, Richard & Walls, Margaret, 2008. "The Incidence of U.S. Climate Policy: Where You Stand Depends on Where You Sit," RFF Working Paper Series dp-08-28, Resources for the Future.

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    • F0 - International Economics - - General

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