REVENUE-RAISING TAXES: GENERAL EQUILIBRIUM EVALUATION OF ALTERNATIVE TAXATION IN U.S. PETROLEUM INDUSTRIES

In: Journal of policy modeling: JPMOD ; a social science forum of world issues, Band 11, Heft 3, S. 425-449

Abstract

THIS PAPER ASSESSES RECENT PROPOSALS TO INCREASE TAXES AND TARIFFS IN THE ENERGY SECTOR TO REDUCE THE U.S. FEDERAL DEFICIT. THE PAPER ESTIMATES THE WELFARE, FISCAL AND EMPLOYMENT EFFECTS OF THE MOST COMMON PROPOSALS. THE ESTIMATES ARE DERIVED FROM A TWELVE-SECTOR GENERAL EQUILIBRIUM MODEL OF THE U.S. ECONOMY CALIBRATED TO 1984. A PROPOSED 25 PERCENT IMPORT TARIFF ON CRUDE OIL WOULD RAISE $7.3 BILLION IN GOVERNMENT REVENUE, WHILE A 15 PERCENT EXCISE TAX ON PETROLEUM PRODUCTS WOULD RAISE $35 BILLION. EACH DOLLAR OF GOVERNMENT REVENUE WOULD COME AT A LOSS OF 25 CENTS IN WELFARE IN THE FIRST CASE, BUT AT ONLY A ONE CENT LOSS IN WELFARE IN THE SECOND. THE PAPER ALSO ESTIMATES THE LEAST COSTLY (IN TERMS OF WELFARE) COMBINATION OF EXCISE TAXES AND IMPORT TARIFFS ON THE TWO SECTORS TO RAISE $20 BILLION IN GOVERNMENT REVENUE. THE OPTIMAL TAX STRUCTURE IS NONUNIFORM, INVOLVING BOTH TAXES AND IMPORT TARIFFS ON OIL, AND A TARIFF AND SMALL SUBSIDY ON PETROLEUM PRODUCTS TO COUNTERACT THE DISTORTION INDUCED BY THE TAXATION OF OIL.