Mileage-Based User Fee Winners and Losers - RAND Corporation

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Chapter 2 introduces specific equity concepts and reviews the findings from equity studies of gasoline taxes and other travel related fees and charges such as toll lanes and emissions taxes. Chapter 3 describes the data used in this study, the 2001 and 2009 NHTS. Chapter 4 describes the methodological approach followed in this study. Chapter 5 presents and discusses the results of the distributional implications of MBUF policy alternatives. Chapter 6 presents and discusses the results of the projections of the distributional implications of MBUFs in years 2015-2035. Chapter 7 concludes the dissertation with a discussion of the limitations of the research, opportunities for further research, and guidelines for considering equity in MBUF policy. Page 20 of 131
2. THE EQUITY OF HIGHWAY USER FEES AND TAXES Equity is a critical concern in the analysis and comparison of tax policies (Brewer and deLeon 1983; Musgrave and Musgrave 1989; Taylor 2010). Policy makers and taxpayers are often interested in whether a new tax will be more or less “equitable.” However, equity concepts can be imprecisely defined and susceptible to a subjective evaluation (Levinson 2010). This dissertation investigates the relative distributional implications of implementing MBUF taxes of various designs. In other words, relative to the existing tax system, who will pay more tax, or less, relative to others after adopting an MBUF? Who will benefit more, or less, relative to others from any change in tax revenue and externalities? The incidence of a tax describes how much of a tax is paid by producers and how much is paid by consumers (Musgrave and Musgrave 1989). For most goods, regardless of whether the tax is directly levied on a supplier, as is the case with fuel taxes, or a consumer, the tax burden is shared. 11 Tax burden is a phase that describes the price and income effect of a tax dollar all are impacted by the taxis split between the two. The proportion of the tax burden paid by each party varies depending on the structure of the market, the price elasticity of demand relative to the price elasticity of supply, and other factors (Musgrave and Musgrave 1989). While the direct incidence of the current gasoline tax falls on the gasoline distributor, the consumer pays all or nearly all of an increase in the tax rate (Alm, Sennoga, and Skidmore 2009). The most obvious difference between a fuel tax and an MBUF is the change in the party upon which the tax is initially levied. Otherwise, as long as vehicle choice is held constant, the societal incidence of the tax is not expected to differ from the gasoline tax since both directly affect consumers driving behavior regarding whether or not to take a trip. 12 Instead of a higher-level consideration of incidence, this dissertation is focused on understanding how the burden of similar taxes varies between households and groups of households. In addition to the amount of tax paid as a part of their costs of driving, households also bear the burden of a fuel tax or MBUF in other ways. Were there no tax, for example, the cost of driving would be lower and so households would make a marginal number of additional trips (McCarthy 2001). Driving also results in various externalities such as traffic congestion and air pollution (Parry and Small 2005; West 2005). In addition, the revenue raised by the tax does not leave the economy. As previosuly discussed in Chapter 1, fuel tax and MBUF revenues are used to finance the maintenance and expansion of the transportation system with socail benefits. The fiscal and social benefits of a tax can partially ofset the economic costs imposed on society and the distribution of these benefits should be considered when comparing tax burdens of various groups (Bento et al. 2009; Levinson 2010). EXTERNALITIES AND PIGOUVIAN TAXES Many taxed goods have negative externalities associated with their use or consumption. Cigarettes, for example, produce a health risk to the individual, but also create costs for society, including secondhand smoke and insurance and healthcare costs that are not internalized by the individual. A Pigouvian tax adds the marginal social cost of consumption to a good with 11 A number of terms are defined in this Chapter but no effort has been made to do so rigorously and mathematically. It would be tedious to read and duplicative of much good work that has preceded this dissertation. Many excellent references are cited for those readers seeking further clarity. 12 As discussed later in Chapter 3, once the vehicle choice assumption is relaxed other incidence changes are possible. This effect is relatively small (Bento et al. 2009). Page 21 of 131
Page 1 and 2: CHILDREN AND FAMILIES EDUCATION AND
Page 3 and 4: Mileage-Based User Fee Winners and
Page 5: ABSTRACT The mileage-based user fee
Page 8 and 9: Lastly, I would especially like to
Page 10 and 11: 6. Future Distributional Implicatio
Page 13 and 14: 1. MILEAGE-BASED USER FEES MOTOR FU
Page 15 and 16: Additionally, fully electric vehicl
Page 17 and 18: MOVING TOWARDS A TAX ON VEHICLE MIL
Page 19: THE EQUITY IMPLICATIONS OF MBUFS AR
Page 23 and 24: “regressive, progressive, or neut
Page 25 and 26: 3. DATA AND MODEL This chapter desc
Page 27 and 28: Table 3.1 Weighted Sample Means of
Page 29 and 30: values and their robust standard er
Page 31 and 32: Table 3.2 Table of Coefficients Lin
Page 33 and 34: Figure 3.1 Distribution of Price El
Page 35 and 36: This expression illustrates that th
Page 37 and 38: method used by FHWA to calculate th
Page 39 and 40: least fuel efficient vehicle is gre
Page 41: State fixed effects There are diffe
Page 44 and 45: gasoline tax with a flat per-mile t
Page 46 and 47: Alternative 3: Replace both the sta
Page 48 and 49: Alternative 8: Replace state and fe
Page 50 and 51: Disaggregating the change in taxes
Page 52 and 53: “relative share rate of return fr
Page 54 and 55: gasoline in the United States could
Page 56 and 57: The first method divides total fede
Page 58 and 59: Risk of global warming: The margina
Page 60 and 61: additional projections based on alt
Page 62 and 63: industry and public sector energy c
Page 64 and 65: FLAT-RATE MBUFS ARE NO MORE OR LESS
Page 66 and 67: Table 5.1 Percent Change in Average
Page 68 and 69: Table 5.3 Change in the Consumer Su
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weighting of the changes in revenue
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Table 5.6 Average Changes in Federa
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Table 5.7 Components of Welfare Cha
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The finding that increasing the rat
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Table 5.10 Change in Consumer Surpl
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of adopting MBUFs. Specifically, th
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Table 5.14 Percent Change in VMT an
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side by side for each alternative.
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The findings for other groups are m
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Table 5.17 Average Change in Consum
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6. FUTURE DISTRIBUTIONAL IMPLICATIO
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e enacted. Figure 6.4 completes the
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Table 6.1 Projections of Suits Indi
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change in consumer surplus for key
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7. CONCLUSION The purpose of this d
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The marginal costs of congestion an
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Commercial trucks were explicitly n
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The variable name for Hispanic stat
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price series from the EIA. The “M
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Table A.1 State Gasoline Excise Tax
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Table A.3 Household Type Categories
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CALCULATING THE CHANGE IN CONSUMER
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Revenue Revenue Revenue Method
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PROJECTIONS OF CHANGES IN CONSUMER
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Table B.3 Projections of Changes in
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LIST OF REFERENCES AAA. 2011. Your
Page 129 and 130:
Musgrave, Richard A., and Peggy B.
Page 131:
Wachs, Martin. 2003. Improving effi
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