The Optimal Gas Tax for California

C.-Y. Cynthia Lin Lawell and Lea Prince

Institute of Transportation Studies, Working Paper Series from Institute of Transportation Studies, UC Davis

Abstract: This paper calculates the optimal gasoline tax for the state of California. According to our analysis, the optimal gasoline tax in California is $1.37/gallon, which is over 3 times the current California tax when excluding sales taxes. The Pigovian tax is the largest part of this tax, comprising $0.85/gallon. Of this, the congestion externality is taxed the most heavily, at $0.27, followed by oil security, accident externalities, local air pollution, and finally global climate change. The other major component, a Ramsey tax, comprises a full $0.52 of this tax, reflecting the efficiency in raising revenues from a tax on gasoline consumption due to the inelastic demand of this consumption good.

Keywords: UCD-ITS-RP-10-03; Business (search for similar items in EconPapers)
Date: 2010-01-01
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.escholarship.org/uc/item/43k7p395.pdf;origin=repeccitec (application/pdf)

Related works:
Journal Article: The optimal gas tax for California (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cdl:itsdav:qt43k7p395

Access Statistics for this paper

More papers in Institute of Transportation Studies, Working Paper Series from Institute of Transportation Studies, UC Davis Contact information at EDIRC.
Bibliographic data for series maintained by Lisa Schiff ().