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Effectiveness of excise taxes

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Please help with the following finance problems. Provide at least 100 words.

Analyze the impact of excise taxes on gasoline.
1. Find the excise (and other taxes) on a gallon of gasoline in your home state.
2. Find the excise (and other taxes) on a gallon of gasoline in two neighboring (or nearby) states. ( INDIANA AND OHIO)
3. Calculate the difference in tax rates. Will consumers be tempted to cross state lines to buy gas?
4. Suggest an economic policy to maximize state tax revenues from the gasoline excise tax. Why do you recommend this?

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Solution Preview

I'm not sure what state you're in, but based on your proximity to Indiana and Ohio, I'm guessing either Kentucky or Michigan. For excise tax rates, see http://www.indianagasprices.com/tax_info.aspx.

You can see that the difference between Ohio and Indiana is not great (46 cents vs. 50 cents). ...

Solution Summary

This solution provides a discussion about the evasion of gasoline taxes by crossing state lines. The explanation is given in 198 words.

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