How high should the tax on gasoline be? Most European countries impose
gasoline taxes that are much higher than those in the United States. Many observ-ers have suggested that the United States also should tax gasoline more heavily. A
2007 study published in the Journal of Economic Literature summarized the research
on the size of the various externalities associated with driving. It concluded that
the optimal corrective tax on gasoline was $2.10 per gallon, compared to the actual
tax in the United States of only 40 cents.
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