Effects of reducing the deficit with an oil-import tariff
Reducing the federal budget deficit with an oil import tariff would be more detrimental to the economy than would other commonly used tax policies. Although most taxes reduce economic growth by raising prices or lowering income, the magnitudes of the induced distortions are different for different tax policies. Simulations reveal that a broader-based tax that raises identical revenue, such as an income tax surcharge, has smaller adverse effects on GNP and inflation than does an oil import tariff. The simulations also show that an import tariff would provide short-term protection to the energy industry by raising energy prices, but the gains in the energy sector are dwarfed by the losses in the rest of the economy. 12 references, 4 figures.
- Research Organization:
- Federal Reserve Bank of Dallas, TX
- OSTI ID:
- 5130293
- Journal Information:
- Econ. Rev.; (United States), Journal Name: Econ. Rev.; (United States); ISSN ECRVD
- Country of Publication:
- United States
- Language:
- English
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294002 -- Energy Planning & Policy-- Petroleum
BUDGETS
ECONOMIC IMPACT
ECONOMY
ENERGY SOURCES
FOSSIL FUELS
FUELS
IMPORTS
MATHEMATICAL MODELS
NORTH AMERICA
PETROLEUM
TARIFFS
USA