A DISTRIBUTIONAL ANALYSIS OF AN ENVIRONMENTAL TAX SHIFT: Data 4

A similar approach is used for the other pollutants. Because a significant amount of NOX, VOC and PM-10 emissions are due to motor vehicles, I also include a $35 per new vehicle tax to proxy for a tax on motor vehicle emissions. In total, these air pollution taxes would raise $40.5 billion.

In 1994, 209 million tons of solid waste were generated and 49 million tons were recovered through recycling efforts. The remaining 160 million tons was disposed in landfills (127 million tons) or burned (33 million tons), primarily for energy recovery16. While burning solid waste for energy production was initially viewed as a valuable energy source, it has increasingly been recognized that it creates its own air and solid waste pollution problems. In an effort to reduce the amount of materials disposed of either in landfills or by burning, I include a tax on unrecovered waste of $55 per ton. Hamond et al. (1997) refer to this as a virgin materials tax. Based on 1994 quantities of unrecovered waste, this tax would raise $9.3 billion. I allocate this tax to industries on the basis of materials that make up the waste being generated.

Consumption Items Carbon Motor Air Pollution Virgin Total TaxTax Fuels Tax Taxes Materials Rate

Tax

Food Off-Premise 0.9% 0.2% 0.8% 0.3% 2.2%
Food On-Premise 0.5% 0.1% 0.6% 0.2% 1.3%
Food Furnished Employees 1.0% 0.2% 1.0% 0.4% 2.6%
Tobacco Products 0.4% 0.1% 0.5% 0.2% 1.2%
Alcohol Off-Premise 0.8% 0.2% 0.8% 0.3% 2.0%
Alcohol On-Premise 0.5% 0.1% 0.6% 0.2% 1.3%
Clothing and Shoes 0.8% 0.1% 1.0% 0.3% 2.2%
Clothing Services 0.5% 0.1% 0.6% 0.2% 1.3%
Jewelry and Watches 0.7% 0.1% 3.8% 0.3% 4.9%
Toilet Articles and Preparations 0.8% 0.1% 0.7% 0.3% 2.0%
Barbershops, Beauty Parlors, Health Clubs 0.5% 0.1% 0.6% 0.2% 1.3%
Tenant-Occupied Nonfarm Dwellings–Rent 0.2% 0.0% 0.3% 0.1% 0.6%
Other Rented Lodging 0.5% 0.1% 0.6% 0.2% 1.3%
Furniture and Durable Household Equipment 0.8% 0.1% 0.9% 0.3% 2.1%
Nondurable Household Supplies and Equipment 0.0% 0.0% 0.0% 0.1% 0.1%
Electricity 12.0% 0.2% 8.1% 0.1% 20.4%
Natural Gas 19.6% 0.1% 6.0% 0.1% 25.8%
Water and Other Sanitary Services 0.6% 0.0% 0.4% 0.1% 1.1%
Fuel Oil and Coal 12.1% 0.2% 1.8% 0.1% 14.2%
Telephone and Telegraph 0.3% 0.1% 0.5% 0.1% 1.0%
Consumption Items Carbon Motor Air Pollution Virgin Total TaxTax Fuels Tax Taxes Materials Rate

Tax

Domestic Service, Other Household Operation 1.0% 0.2% 0.6% 0.4% 2.1%
Medical Care 0.5% 0.1% 0.6% 0.2% 1.3%
Business Services 0.3% 0.1% 0.5%/p> 0.1% 1.0%
Expense of Handling Life Insurance 0.3% 0.1% 0.5% 0.1% 0.9%
New and Used Motor Vehicles 0.8% 0.2% 0.7% 0.2% 1.9%
Tires, Tubes, Accessories, and Other Parts 0.9% 0.2% 0.6% 0.3% 2.0%
Repair, Greasing, Washing, Parking, Storage, Rental 0.5% 0.1% 0.6% 0.2% 1.3%
Gasoline and Oil 11.6% 13.7% 1.7% 0.1% 27.1%
Bridge, Tunnel, Ferry, and Road Tolls 0.6% 0.0% 0.4% 0.1% 1.1%
Auto Insurance 0.3% 0.1% 0.5% 0.1% 0.9%
Mass Transit Systems 1.9% 0.6% 0.8% 0.1% 3.4%
Taxicab, Railway, Bus, and Other Travel Expenses 1.9% 0.6% 0.8% 0.1% 3.4%
Airline Fares 1.9% 0.6% 0.8% 0.1% 3.4%
Books and Maps 0.7% 0.2% 0.6% 0.7% 2.2%
Magazines, Newspapers, Other Nondurable Toys, etc. 0.8% 0.1% 1.9% 0.4% 3.3%
Recreation and Sports Equipment 0.7% 0.1% 1.2% 0.2% 2.2%
Other Recreation Services 0.5% 0.1% 0.6% 0.2% 1.3%
Consumption Items Carbon Motor Air Pollution Virgin Total TaxTax Fuels Tax Taxes Materials Rate

Tax

Pari-Mutual Net Receipts 0.5% 0.1% 0.6% 0.2% 1.3%
Higher Education 0.5% 0.1% 0.6% 0.2% 1.3%
Nursery, Elementary, and Secondary Education 0.5% 0.1% 0.6% 0.2% 1.3%
Other Education Services 0.5% 0.1% 0.6% 0.2% 1.3%
Religious and Welfare Activities 0.5% 0.1% 0.6% 0.2% 1.3%

A combination of taxes on energy, air pollutants, and unrecovered solid wastes as described above will raise revenue equal to roughly 10 percent of federal receipts. Table 3 summarizes the revenues. Table 4 gives a detailed breakdown of the increase in consumer prices that results from this collection of taxes. The carbon tax primarily raises the price of utilities as well as gasoline products. The largest increase is for natural gas. This may seem surprising since coal is an important component of electricity production.
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