The Optimal Gas Tax for California
C.-Y. Cynthia Lin Lawell () and
Institute of Transportation Studies, Working Paper Series from Institute of Transportation Studies, UC Davis
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)
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Journal Article: The optimal gas tax for California (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:cdl:itsdav:qt43k7p395
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