How large are tax subsidies to motor-vehicle users in the US?
There has been considerable discussion about the extent to which motor-vehicle use in the US is â€œsubsidized,â€ 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 â€œtax subsidyâ€ to motor-vehicle users in the US may be in the range of $19â€“64 billion (109) per year, or $0.11â€“0.37 per gallon ($0.03â€“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.
|Date of creation:||01 May 2008|
|Date of revision:|
|Contact details of provider:|| Postal: 2028 Academic Surge, One Shields Avenue, Davis, CA 95616|
Phone: (530) 752-6548
Web page: http://www.escholarship.org/repec/itsdavis/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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 qt1tk1s936, Institute of Transportation Studies, UC Davis.
- R. G. Lipsey & Kelvin Lancaster, 1956. "The General Theory of Second Best," Review of Economic Studies, Oxford University Press, vol. 24(1), pages 11-32.
- 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.
When requesting a correction, please mention this item's handle: RePEc:cdl:itsdav:qt3pc3d715. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lisa Schiff)
If references are entirely missing, you can add them using this form.