ON THE ELIMINATION OF GASOLINE TAX DEDUCTIBILITY AND THE DISTRIBUTION OF INCOME

In 1979, the deduction for state and local gasoline taxes on income tax returns was eliminated. To determine the resulting impact on income distribution, the change in net gasoline tax incidence must be determined. Conventionally, the incidence of a (gross) gasoline tax has been calculated by noting the relationship between income and purchases of motor fuel. Most studies have not explicitly included consideration of the impact of allowing state and local gasoline taxes to be deducted; however, one study concluded that the impact of deductibility is to make the fuel tax less regressive. Using data available from the Bureau of Labor Statistics (U.S. Department of Labor) and the Internal Revenue Service (U.S. Department of the Treasury)), the opposite was found. This resulted from the positive correlation of income with three factors: marginal tax rate, percentage of taxpayers who itemize deductions, and amount of gasoline tax paid. It is concluded in this paper that the elimination of deductibility has made the gasoline tax less regressive.

• Record URL:
  • http://onlinepubs.trb.org/Onlinepubs/trr/1985/1009/1009-002.pdf
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• Supplemental Notes:
  • Distribution, posting, or copying of this PDF is strictly prohibited without written permission of the Transportation Research Board of the National Academy of Sciences. Unless otherwise indicated, all materials in this PDF are copyrighted by the National Academy of Sciences. Copyright © National Academy of Sciences. All rights reserved. Publication of this paper sponsored by Committee on Taxation. Finance, and Pricing.
• Authors:
  • Rock, Steven M
• Publication Date: 1985

Media Info

• Features: References; Tables;
• Pagination: p. 8-11
• Monograph Title: Financing state and local transportation
• Serial:
  • Transportation Research Record
  • Issue Number: 1009
  • Publisher: Transportation Research Board
  • ISSN: 0361-1981

Subject/Index Terms

• TRT Terms: Economic impacts; Gasoline; Impact studies; Income; Physical distribution; Repeal; Statistical analysis; Taxation
• Old TRIS Terms: Deductibility
• Subject Areas: Data and Information Technology; Economics; Finance; Freight Transportation; Highways; I10: Economics and Administration;

Filing Info

• Accession Number: 00457779
• Record Type: Publication
• ISBN: 0309038200
• Files: TRIS, TRB
• Created Date: Aug 31 1986 12:00AM