IDEAS home Printed from https://ideas.repec.org/p/cdl/itsdav/qt3pc3d715.html
   My bibliography  Save this paper

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

Author

Listed:
  • Delucchi, Mark
  • Murphy, James

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.

Suggested Citation

  • Delucchi, Mark & Murphy, James, 2008. "How large are tax subsidies to motor-vehicle users in the US?," Institute of Transportation Studies, Working Paper Series qt3pc3d715, Institute of Transportation Studies, UC Davis.
    • Handle: RePEc:cdl:itsdav:qt3pc3d715
    as

    Download full text from publisher

    File URL: https://www.escholarship.org/uc/item/3pc3d715.pdf;origin=repeccitec
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. R. G. Lipsey & Kelvin Lancaster, 1956. "The General Theory of Second Best," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 24(1), pages 11-32.
    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.
    3. Otto A. Davis & Andrew B. Whinston, 1965. "Welfare Economics and the Theory of Second Best," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 32(1), pages 1-14.
    4. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Delucchi, Mark A. & McCubbin, Donald R., 2010. "External Costs of Transport in the U.S," Institute of Transportation Studies, Working Paper Series qt13n8v8gq, Institute of Transportation Studies, UC Davis.
    2. Tscharaktschiew, Stefan & Hirte, Georg, 2012. "Should subsidies to urban passenger transport be increased? A spatial CGE analysis for a German metropolitan area," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(2), pages 285-309.
    3. Juliet Elu & Gregory Price, 2015. "Consumer’s Surplus with a Racial Apology? Black Relative to Non-Black Inequality in the Welfare Gains of Fuel-Efficient Cars and Trucks," The Review of Black Political Economy, Springer;National Economic Association, vol. 42(1), pages 135-154, June.
    4. Jacek Witkowski & Tomasz Kusio & Mariantonietta Fiore & Zbigniew Olesiński, 2024. "Taxation Preferences and the Uptake of Hybrid and Electric Vehicles in Poland’s Ten Largest Cities: A Case Study," Sustainability, MDPI, vol. 16(3), pages 1-12, January.
    5. Hirte, Georg & Tscharaktschiew, Stefan, 2013. "The optimal subsidy on electric vehicles in German metropolitan areas: A spatial general equilibrium analysis," Energy Economics, Elsevier, vol. 40(C), pages 515-528.
    6. 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, vol. 57(C), pages 585-601.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. David Wiens, 2016. "Assessing ideal theories," Politics, Philosophy & Economics, , vol. 15(2), pages 132-149, May.
    2. Roger L. Faith & Earl A. Thompson, 1979. "A Paradox in the Theory of Second Best," UCLA Economics Working Papers 156, UCLA Department of Economics.
    3. Wai Chiu Woo, 2017. "The Way We Teach Public Economics: A Rationalization Using the Theory of Third Best," Pacific Economic Review, Wiley Blackwell, vol. 22(2), pages 229-248, May.
    4. John P. Walsh, 1982. "On Deriving Pricing Rules in the Theory of Second Best," Public Finance Review, , vol. 10(4), pages 499-509, October.
    5. Melvin Hinich & Michael Munger, 2006. "In memoriam: Otto “Toby” Davis, 1934–2006," Public Choice, Springer, vol. 128(3), pages 357-359, September.
    6. Krishna, Pravin & Panagariya, Arvind, 2000. "A unification of second best results in international trade," Journal of International Economics, Elsevier, vol. 52(2), pages 235-257, December.
    7. V. W. Yorgason, 1976. "But Who Reviews the Reviewers? The Case of Eggs," Canadian Public Policy, University of Toronto Press, vol. 2(3), pages 511-519, Summer.
    8. Nicholas Chesterley, 2017. "Defaults, Decision Costs and Welfare in Behavioural Policy Design," Economica, London School of Economics and Political Science, vol. 84(333), pages 16-33, January.
    9. Randall Holcombe, 2009. "The behavioral foundations of Austrian economics," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 22(4), pages 301-313, December.
    10. Eromenko, Igor, 2010. "Accession to the WTO. Computable General Equilibrium Analysis: the Case of Ukraine. Part I," MPRA Paper 67476, University Library of Munich, Germany.
    11. Lawrence J. White & W. Scott Frame, 2004. "Emerging Competition and Risk-Taking Incentives at Fannie Mae and Freddie Mac," Working Papers 04-02, New York University, Leonard N. Stern School of Business, Department of Economics.
    12. Martin B. Hackmann & Jörg Heining & Roman Klimke & Maria Polyakova & Holger Seibert, 2025. "Health Insurance as Economic Stimulus? Evidence from Long-Term Care Jobs," NBER Working Papers 33429, National Bureau of Economic Research, Inc.
    13. Vallury, Sechindra & Abbott, Joshua K. & Shin, Hoon C. & Anderies, John M., 2020. "Sustaining Coupled Irrigation Infrastructures: Multiple Instruments for Multiple Dilemmas," Ecological Economics, Elsevier, vol. 178(C).
    14. Emmanuel Petrakis & Panagiotis Skartados, 2022. "Vertical Opportunism, Bargaining, and Share-Based Agreements," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 60(4), pages 549-565, June.
    15. Richard Lipsey, 2007. "Reflections on the general theory of second best at its golden jubilee," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(4), pages 349-364, August.
    16. Daron Acemoglu & James A. Robinson, 2013. "Ekonomia kontra polityka: niebezpieczne rady w kwestiach polityki ekonomicznej," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 11-12, pages 113-136.
    17. Jonathan M. Lee, 2015. "The Impact of Heterogeneous NOx Regulations on Distributed Electricity Generation in U.S. Manufacturing," Working Papers 15-12, Center for Economic Studies, U.S. Census Bureau.
    18. Klaus Wälde, 2016. "Emotion Research in Economics," Working Papers 1611, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz.
    19. Sergio Turner, 2004. "Pareto Improving Taxation in Incomplete Markets," Econometric Society 2004 Latin American Meetings 310, Econometric Society.
    20. Marco de Pinto & Laszlo Goerke, 2020. "Welfare‐enhancing Trade Unions in an Oligopoly with Excessive Entry," Manchester School, University of Manchester, vol. 88(1), pages 60-90, January.

    More about this item

    Keywords

    UCD-ITS-RP-08-27; Economic Policy;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cdl:itsdav:qt3pc3d715. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Lisa Schiff (email available below). General contact details of provider: https://edirc.repec.org/data/itucdus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.