Peter J Wilcoxen > PAI 300 Economics for Policy Analysis

Memo 1: Gas Tax Analysis

Due on Teams on Friday 3/1 at 11:59 pm

Use the template on Teams to prepare a clear and concise memo summarizing the economic impact of the DC gas tax evaluated earlier in the semester. You should augment the analysis from Weekly 3 with the additional analysis in Daily 15 on tax burdens and effective tax rates. In addition to the data given in the previous assignment, you can assume that the typical incomes of low and high income households are $25,000 and $75,000, respectively.

Your target audience is the city's Committee on Finance and Revenues. You should assume they are knowledgable about tax policies in general but are not familiar with this specific proposal. A graph or table or two should be used to illustrate key points but everything must be explained clearly in words as well.

In writing up the memo, please keep in mind that the main purpose is to present all the facts as clearly as possible, NOT to express your personal opinion: it's analytical reporting, not editorial writing. For example, "Policy X costs more than Policy Y but delivers fewer benefits" is a factual critique and would be great in a memo. Similarly, "Policy X is regressive" or "Policy Y is progressive" are also factual and appropriate for a memo. "Policy X is bad because it is unfair to Group Z" is an opinion and should be left out.

Please note that this is an individual assignment: you must write the memo yourself rather than working in a group. Also, this exercise is graded partly on the quality of your exposition: that is, how clearly and concisely you present the analysis, so please pay attention to logical organization, appropriate pargraphing, and correct spelling and grammar. 

The sections in the template should have the information indicated below. Please use single spacing and don't exceed 2 pages.

Proposed Policy

This should be a brief summary of the current (BAU) situation and the proposed policy change. It should say a little bit about the types of households, the number of each, the price of gasoline, the total quantity demanded, the proposed tax change, and the goals of the policy.

Overall Impacts on the Market

This section should explain what happens to the market as a whole: the new buyer and seller prices, the new total quantity of gas, the amount of tax revenue raised, and the overall cost of the policy in deadweight loss per dollar of revenue. It should also mention the buyer and seller tax burdens as percentages of the tax, and give the changes and percentage changes in key prices and quantities.

Distributional Impacts

This section should present more detail on what happens to buyers and sellers in the market. Ideally, it should allow the reader to understand in detail who gains or loses from the policy, and whether those gains are large or small. It's especially important to compare and contrast the impacts on the two types of households. Also, this section should discuss whether the tax is progressive or regressive.


Briefly discuss whether the policy achieves its goals, and summarize the key strengths and weakness revealed in your analysis.

Additional Information

Quick Tips on Writing Policy Memos
Grading Rubric
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Peter J Wilcoxen, The Maxwell School, Syracuse University
Revised 02/22/2024