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Economic Commentary

The Energy Tax: Who Pays?

In his State of the Union address, President Clinton called for a broad-based energy tax to help reduce the federal budget deficit. The tax is expected to generate $21.1 billion in 1997 when it is fully phased in — one-quarter of all new revenue in the overall budget package. However, the motivation of the tax is not solely revenue generation. The administration’s favoring of an energy tax over other potential revenue sources is clearly rooted in its desire to further the social goals of protecting the environment, conserving energy, and reducing our dependence on foreign oil. In addition, the Treasury Department indicated that the tax had to be structured so that it would be borne “fairly and equitably across the country.”

The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This paper and its data are subject to revision; please visit for updates.

Suggested Citation

Schweitzer, Mark E., and Adam Werner. 1993. “The Energy Tax: Who Pays?” Federal Reserve Bank of Cleveland, Economic Commentary 5/1/1993.

This work by Federal Reserve Bank of Cleveland is licensed under Creative Commons Attribution-NonCommercial 4.0 International