Assessments of Alternative Funding Options for Infrastructure Investment

Abstract

This paper assessed the potential impact on the U.S. economy of a hypothetical infrastructure investment program funded by three alternative options: (1) an increase in the federal fuel excise tax rate, (2) introduction of a nation-wide vehicle mileage tax (VMT), and (3) introduction of a nation-wide vehicle weight tax, using the KPMG computable general equilibrium (CGE) model. To demonstrate potential applications of a CGE model for the policy impact analysis, detailed modeling results under the federal fuel excise tax funding option are first discussed. Then its main macroeconomic impacts are compared with those under the other two funding options.