How Regressive Are Mobility-Related User Fees and Gasoline Taxes?

Edward L. Glaeser, Caitlin S. Gorback and James M. Poterba

Tax Policy and the Economy, 2023, vol. 37, issue 1, 1 - 56

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 lower-expenditure households, because better-off households consume more nontradable goods that do not require transportation. User charges for airports, subways, and commuter rail are progressive, and bus fees loom much larger for lower-income households.

Date: 2023
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