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Who Pays Broad-Based Energy Taxes? Computing Lifetime and Regional Incidence

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  • Nicholas Bull
  • Kevin A. Hassett
  • Gilbert E. Metcalf

Abstract

This paper measures the incidence of energy taxes using a lifetime framework to study both a Btu tax and a carbon tax. It takes into account two key facts. First, because energy taxes have different incidence effects across the life cycle, it is important to measure the burden of taxes in terms of lifetime incidence, not just their burden in a given year. To take account of lifetime incidence, we introduce an estimation methodology for lifetime-correction as well as showing current consumption measures. Second, energy taxes have a total effect that combines both direct and indirect effects: in addition to directly increasing the price of energy goods, energy taxes also indirectly increase the price of all other goods in proportion to the energy used to produce them. We provide incidence estimates by income group and by geographical region.

Suggested Citation

  • Nicholas Bull & Kevin A. Hassett & Gilbert E. Metcalf, 1994. "Who Pays Broad-Based Energy Taxes? Computing Lifetime and Regional Incidence," The Energy Journal, , vol. 15(3), pages 145-164, July.
    • Handle: RePEc:sae:enejou:v:15:y:1994:i:3:p:145-164
    DOI: 10.5547/ISSN0195-6574-EJ-Vol15-No3-8
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    References listed on IDEAS

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    1. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1.
    2. Milton Friedman, 1957. "Introduction to "A Theory of the Consumption Function"," NBER Chapters, in: A Theory of the Consumption Function, pages 1-6, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    Energy taxes; BTU tax; Carbon tax; Lifetime income incidence framwork;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

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