Working Paper: NBER ID: w30746
Authors: Edward L. Glaeser; Caitlin S. Gorback; James M. Poterba
Abstract: Pigouvian taxes and user fees can address environmental externalities and efficiently fund transportation infrastructure, but these policies may place burdens on poorer households. This paper presents new evidence on the distributional consequences of the gasoline tax, bus and light rail charges and a vehicle miles traveled (VMT) tax. Gas taxes have become more regressive over time, partially because of environmentally-oriented technological change, although the share of expenditures on gas taxes declines with expenditures much less than the share of income spent on gas taxes declines with income. Replacing the gasoline tax with a household-level VMT tax would increase the average tax burden on households in the top income and expenditure deciles, because of their greater use of hybrid-electric and battery-electric vehicles. This progressive shift would be small given current levels of hybrid and electric vehicle ownership, but will be larger in the future if such vehicles continue to be more common among higher than lower income households. An expanded commercial VMT would place a larger burden, as a share of expenditures, on lower income or expenditure households, because better-off households consume more non-tradable goods that do not require transportation. User charges for airports, subways and commuter rail are progressive, while bus fees loom much larger for lower income households.
Keywords: mobility-related user fees; gasoline taxes; regressivity; vehicle miles traveled tax; transportation infrastructure
JEL Codes: H23; R48
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Replacing gasoline taxes with VMT tax (R48) | Increased average tax burden on higher-income households (H22) |
| Gasoline taxes (H29) | Increased burden on lower-income households (H22) |
| Higher ownership of HEVs (R48) | Decreased effective tax burden on higher-income households (H31) |
| Higher ownership of HEVs (R48) | Increased relative burden on lower-income households (H22) |
| User charges for transportation services (L90) | Progressive impact on households (D19) |
| Bus fees (R48) | Disproportionate impact on lower-income households (G59) |
| Income levels (D31) | Burden of transportation taxes (H22) |