Taxation of United States general aviation

eneral aviation in the United States has been an important part of the economy and American life. General aviation is defined as all flying excluding military and scheduled airline operations, and is utilized in many areas of our society. The majority of aircraft operations and airports in the United States are categorized as general aviation, and general aviation contributes more than one percent to the United States gross domestic product each year. Despite the many benefits of general aviation, the lead emissions from aviation gasoline consumption are of great concern. General aviation emits over half the lead emissions in the United States or over 630 tons in 2005. The other significant negative externality attributed to general aviation usage is aircraft accidents. General aviation accidents have caused over 8000 fatalities over the period 1994--2006. A recent Federal Aviation Administration proposed increase in the aviation gasoline tax from 19.4 to 70.1 cents per gallon has renewed interest in better understanding the implications of such a tax increase as well as the possible optimal rate of taxation.;Few studies have examined aviation fuel elasticities and all have failed to study general aviation fuel elasticities. Chapter one fills that gap and examines the elasticity of aviation gasoline consumption in United States general aviation. Utilizing aggregate time series and dynamic panel data, the price and income elasticities of demand are estimated. The price elasticity of demand for aviation gasoline is estimated to range from -0.093 to -0.185 in the short-run and from -0.132 to -0.303 in the long-run. These results prove to be similar in magnitude to automobile gasoline elasticities and therefore tax policies could more closely mirror those of automobile tax policies.;The second chapter examines the costs associated with general aviation accidents. Given the large number of general aviation operations as well as the large number of fatalities and injuries attributed to general aviation accidents in the United States, understanding the costs to society is of great importance. This chapter estimates the direct and indirect costs associated with general aviation accidents in the United States. The indirect costs are estimated via the human capital approach in addition to the willingness-to-pay approach. The average annual accident costs attributed to general aviation are found to be ;The final chapter derives a second-best optimal aviation gasoline tax developed from previous general equilibrium frameworks. This optimal tax reflects both the lead pollution and accident externalities, as well as the balance between excise taxes and labor taxes to finance government spending. The calculated optimal tax rate is...