Template-Type: ReDIF-Article 1.0
Author-Name:  Rajeev K. Goel 
Author-Name:  Michael A. Nelson
Title:  The Political Economy of Motor-Fuel Taxation
Classification-JEL: F0
Pages:  43-59
Volume:  Volume20
Issue:  Number 1
Year:  1999
Abstract:  This paper examines the political and economic underpinnings of gasoline tax policy. The theoretical model extends the earlier work of Hettich and Winer (1988) to flush out the effect of a change in the pre-tax price of a taxable activity on the politically optimal tax rate. Using a large cross-sectional sample of U.S. states over 1960-94, the empirical model tests the predictions of the theoretical model within the context of the state tax policy on gasoline. While simultaneously controlling for other politico-economic influences, we find that the influence of changes in gas prices on tax rates is negative. To our knowledge, this is the first study to include a fully developed theoretical model and its empirical application to the gasoline market for a test of the votemaximizing model of tax policy.
Handle: RePEc:aen:journl:1999v20-01-a03
File-URL: http://www.iaee.org/en/publications/ejarticle.aspx?id=1301
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