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

Abstract

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.

Publication
Journal of Public Economics(152)