ABSTRACT
Previous work shows that policies that subsidize new vehicles and tax size, miles, or gasoline efficiently reduce pollution. Less is known about their distributional effects. This paper examines distributional effects by estimating the joint demand for vehicles and miles, using the Consumer Expenditure Survey. Greater price responsiveness among low-income households enhances progressivity of gas or miles taxes across lower incomes, and mitigates regressivity across upper incomes. Taxes on engine size or subsidies to new vehicles are significantly more regressive than gas or miles taxes.
