Which Is Worse for Poor Americans: Energy Efficiency Mandates or Energy Taxes?: New at Reason

Politicians prefer efficiency mandates because they are less obvious to voters than taxes.



U.S. automakers are asking the Trump administration to relax the vehicle efficiency standards imposed on them by the Obama Administrtion. Ratcheting up the mandatory energy efficiency standards for vehicles and appliances was a major part of Obama's effort to reduce greenhouse gas emissions. The Department of Energy calculated that the Obama administration's energy efficiency standards would save consumers more than $520 billion on electricity costs by 2030.

But not all consumers are alike. In a new study contrasting the effects on consumers of energy efficiency standards versus energy taxes, the Georgetown economist Arik Levinson notes that both energy efficiency standards and energy taxes function as a regressive tax, taking a larger percentage of a lower income and a smaller percentage of a higher income. His analysis aims to find out which is more regressive—in other words, which is worse for poor Americans.