TY  - JOUR
AU  - West,Sarah E.
AU  - Williams,Roberton C.,III
TI  - Estimates from a Consumer Demand System: Implications for the Incidence of Environmental Taxes
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9152
PY  - 2002
Y2  - September 2002
UR  - http://www.nber.org/papers/w9152
L1  - http://www.nber.org/papers/w9152.pdf
N1  - Author contact info:
Sarah West
Dept. of Economics
Macalester College
1600 Grand Ave.
St. Paul, MN 55105
E-Mail: wests@macalester.edu
AB  - Most studies suggest that environmental taxes are regressive, and thus are unattractive policy options. We consider the distributional effects of a gasoline tax increase using three welfare measures and under three scenarios for gas tax revenue use. To incorporate behavioral responses we use Consumer Expenditure Survey data to estimate a consumer demand system that includes gasoline, other goods, and leisure. We find that the gas tax is regressive, but that returning the revenue through a lump-sum transfer more than offsets this, yielding a net increase in progressivity. We also find that ignoring behavioral changes in distributional calculations overstates both the overall burden of the tax and its regressivity.
ER  -