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carbon taxes, taxes, South Dakota, economics


The purpose of my research topic is to find a politically feasible means of implementing a carbon tax in South Dakota. This will be accomplished through a revenue neutral tax on motor fuel, offset by a tax break to an important South Dakota industry, such as farming. The tax is needed to accelerate the pace at which consumers are switching to more fuel-efficient vehicles. For many manufacturers, research into fuel efficient engine technology and electric vehicles is happening at an accelerated pace, but until the cost of developing new technologies is paid off, they will remain a luxury with a premium price. New technology usually debuts on the most expensive models and does not become standard on cheaper options until later model years. Raising the price of gasoline will steer consumers and manufacturers towards more fuel-efficient options faster than waiting for new fuel saving developments to become standard on cheaper cars. The tax break included in my project provides an incentive to pursue the policy as well as makes South Dakota a more competitive state for business in the sector which receives a tax cut. My Ideafest presentation will focus on this research idea and the methodology used to come up with a policy that works for South Dakota. This methodology consists of using data from the Department of Revenue and the US Energy Information Administration regarding fuel sales and finding an existing tax to swap out for a motor fuel tax. Researching carbon taxes is of ever-increasing importance to our state. Further action to combat climate change is coming and it is critical that South Dakota looks at what options are viable for the state so that a policy is not rushed in the future.

First Advisor

David Carr

Research Area