Working Paper: NBER ID: w22956
Authors: Arik Levinson
Abstract: Economists promote energy taxes as cost-effective. But policymakers raise concerns about their regressivity, or disproportional burden on poorer families, preferring to set energy efficiency standards instead. I first show that in theory, regulations targeting energy efficiency are more regressive than energy taxes, not less. I then provide an example in the context of automotive fuel consumption in the United States: taxing gas would be less regressive than regulating the fuel economy of cars if the two policies are compared on a revenue-equivalent basis.
Keywords: energy efficiency; taxes; regressivity; energy policy
JEL Codes: H23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| energy efficiency standards (Q41) | more regressive than energy taxes (H23) |
| energy taxes (H23) | less regressive than energy efficiency standards (Q48) |
| gas tax (H29) | less regressive than revenue-equivalent efficiency regulation (H21) |
| shift to footprint-based fuel economy standards (R48) | exacerbated regressivity of fuel economy standards (H23) |
| energy taxes (H23) | lower overall costs for energy services relative to income (Q40) |
| energy efficiency standards (Q41) | heavier burden on poorer households (H22) |