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Assessing the impact of the windfall profits tax on the US economy
Author(s) -
Boyd Roy,
Uri Noel D.
Publication year - 1990
Publication title -
international journal of energy research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.808
H-Index - 95
eISSN - 1099-114X
pISSN - 0363-907X
DOI - 10.1002/er.4440140106
Subject(s) - revenue , economics , agriculture , context (archaeology) , agricultural economics , goods and services , consumption (sociology) , welfare , government (linguistics) , windfall gain , tax revenue , natural resource economics , economy , business , market economy , public economics , macroeconomics , finance , ecology , paleontology , social science , linguistics , philosophy , sociology , biology
The paper focuses on the effect that the elimination of the windfall profits tax (WPT) on crude oil would have on the various producing sectors, consuming sectors and household categories in the USA, where the interrelationships between these entities are explicitly considered. Special attention is given to the agricultural sectors of the economy. Thus, in the context of a general equilibrium model, the effect of the elimination of the WPT on the producing sectors in general and the three agricultural sectors plus forestry in particular, on the consuming sectors, on households and on the Government is calculated. Over the period 1984–1990, such a policy initiative would result in higher output by the non‐crude‐oil producing sectors (by about $1.783 billion), higher consumption of goods and services (by about $1.651 billion), and an increase in welfare (by about $1.625 billion). The Government will realize a decrease in revenue of about $1.362 billion while the domestic crude oil industry will experience an increase in output of approximately $1.217 billion. For the agricultural sectors, output overall will fall. Specifically, for the programme crops sector, output will decline by $39 million, for the livestock sector, output will fall by $14 million, for all other agricultural commodities, output will decline by $36 million and for forestry, output will be reduced by $29 million. Attendant on these reductions in output will be lower prices for the respective commodities.