From Gallons to Miles: A Disaggregate Analysis of Automobile Travel and Externality Taxes


Policymakers have prioritized increasing highway revenues as rising fuel economy and a fixed federal gasoline tax have led to highway funding deficits. We use a novel disaggregate sample of motorists to estimate the effect of the price of a vehicle mile traveled on VMT, and we provide the first national assessment of VMT and gasoline taxes that are designed to raise a given amount of revenue. We find that a VMT tax dominates a gasoline tax on efficiency, distributional, and political groundswhen policymakers enact independent fuel economy policies and when the VMT tax is differentiated with externalities imposed per mile.

Journal of Public Economics(152)