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This is my favorite policy paper. Shows optimal way to appropriate Middle East oil rents without military intervention. Still seems like a good idea to me.

Download the Paper (996 K, PDF file) - March 1, 1982 Tell a colleague about it. Printing Tips: Select 'print as image' in the Acrobat print dialog if you have trouble printing.

ABSTRACT:
This paper argues that since the supply of oil in the ground is inelastic, the incidence of a sales tax on oil, maintained forever at a fixed rate, would fall entirely on the oil-suppliers. In the world economy, however, the elasticity of supply of oil to a single country depends on that country’s imports as a share of world output and on the elasticity of demand for that country. The paper calculates optimal tax rates for a country as a function of these variables and estimates optimal oil tax rates for the U.S., for some OECD countries separately, and for the U.S. plus the OECD collectively. Current U.S. tax rates are shown to be far below optimal values.

SUGGESTED CITATION:
Ted Bergstrom, "On Capturing Oil Rents with a National Excise Tax" (March 1, 1982). Department of Economics, UCSB. Ted Bergstrom. Paper 1982A.
http://repositories.cdlib.org/ucsbecon/bergstrom/1982A