On the Federal Excise Tax Exemption for U.S. Gasoline Exports
Contemporary Tax Journal, vol. 5, issue 1 (2015)
10 Pages Posted: 17 Jun 2015 Last revised: 15 Apr 2016
Exports of refined gasoline are exempt from Federal excise taxation. Accordingly, an increase in the Federal excise tax on gasoline may simply increase the market price of gasoline in the U.S. and encourage the export of gasoline to foreign markets, primarily West Africa and Latin America. Any reduction in negative environmental externalities from an increase in the Federal gasoline excise tax in the United States is therefore likely to be mooted (or perhaps made worse) on a global basis. The Federal excise tax on gasoline appears to be the most regressive form of taxation when both direct and indirect costs are taken into account. This article is the first to estimate the indirect costs (i.e., imbedded transports costs) to U.S. persons of a Federal gasoline and diesel taxes using data from the Consumer Expenditure Survey of 2012. This article further updates and expands Poterba´s (1991) empirical calculation of the regressivity of the Federal gasoline tax based on direct gasoline expenditures. Finally, this article recommends that the Jones Act restrictions on gasoline shipment between the Gulf Coast refineries and East Coast terminals be removed.
Keywords: gasoline taxes; excise tax; pigou
JEL Classification: H20, K34
Suggested Citation: Suggested Citation