{
  "id": "R43189",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "R43189",
  "active": false,
  "source": "EveryCRSReport.com",
  "versions": [
    {
      "source": "EveryCRSReport.com",
      "id": 423575,
      "date": "2013-08-26",
      "retrieved": "2016-04-06T23:17:57.044339",
      "title": "Federal Excise Taxes: An Introduction and General Analysis ",
      "summary": "There are four common types of excise taxes: (1) sumptuary (or \u201csin\u201d) taxes, (2) regulatory or environmental taxes, (3) benefit-based taxes (or user charges), and (4) luxury taxes. Sumptuary taxes were traditionally imposed for moral reasons, but are currently rationalized, in part, to discourage a specific activity that is thought to have negative spillover effects (or \u201cexternalities\u201d) on society. Regulatory or environmental taxes are imposed to offset external costs associated with regulating public safety or to discourage consumption of a specific commodity that is thought to have negative externalities on society. Benefit-based taxes (which include user charges) are imposed to charge users of a particular public good for financing and maintenance of that public good. Lastly, luxury taxes are primarily imposed as one way to raise revenue, particularly from higher-income households.\nThis report provides an introduction and general analysis of excise taxes. First, a brief history of U.S. excise tax policy is provided. Second, the various forms of excise taxes and their respective administrative advantages and disadvantages are described. Third, the effect of federal excise taxes on federal, state, and local tax revenue is discussed. Fourth, the economic effects of various types of excise taxes are analyzed. The effects on consumer behavior and equity among taxpayers could be important issues for assessment of current excise tax policy or for the design of new excise taxes. Lastly, a list of references to other CRS reports on specific excise taxes is presented. \nExcise taxes have generally played a diminishing role in financing the federal government since the middle of the 20th century for multiple reasons. First, Congress has taken legislative action to eliminate many categories of excise taxes. Second, most excise tax rates set in statute have declined in value over time due to inflation and inaction by Congress to change tax rates set in statute.\nExcise taxes tend to be regressive, in that lower-income households generally pay a larger share of their income in excise taxes than higher-income households. Because excise taxes generally increase the price of the taxed commodity, they also tend to lower consumer demand. \nExcise taxes play a much smaller role in financing the federal government than they did in the past. In 1960, federal excise tax collections were $355.49 billion (in 2012 constant dollars, after accounting for inflation). In FY2012, federal excise tax collections were $56.17 billion (roughly one-sixth of their 1960 value in 2012 constant dollars). Federal excise taxes comprised 7.0% of all federal revenue in 1973, whereas they comprised 3.2% in 2012. \nCongress may be interested in revisiting the revenue and economic effects of excise taxes because these taxes could play a growing role in financing public goods. Some long-standing excise tax proposals to correct alleged social costs have resurfaced from time to time in policy discussions. Some of these proposals could be targeted towards specific products or activities (e.g., a \u201csugar-sweetened beverages\u201d tax), while others could affect a broad range of economic activity and raise a significant amount of revenue (e.g., a carbon tax). On the other hand, there is also interest in reducing current excise tax rates as a means to encourage short-term growth in particular industries.",
      "type": "CRS Report",
      "typeId": "REPORTS",
      "active": false,
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      "topics": []
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  ],
  "topics": [
    "Economic Policy"
  ]
}