Energy Tax Act

3174, enacted November 9, 1978) is a law passed by the U.S. Congress as part of the National Energy Act.

[1] This law gave an income tax credit to private residents who use solar, wind, or geothermal sources of energy.

[2] The renewable energy credits of this law were increased by the Crude Oil Windfall Profits Tax Act of 1980.

The tax is collected by the Internal Revenue Service (IRS) and normally paid by the manufacturer or importer.

The combined fuel economy MPG value (55% city, 45% highway) is used to determine tax liability.

The unadjusted combined MPG of a vehicle can be approximated from the city and highway values provided in the Fuel Economy Guide by the following equation[citation needed]: Since this is an approximate calculation, the actual gas guzzler tax may be off by one tax bracket.

Gas guzzler tax creates incentive to meet the minimum MPG requirement by manufacturer.

The Gas Guzzler Tax led to the successive downsizing of most major American passenger autos, and the combination of the tax and late-'70s/early-'80s economic woes effectively killed the American full-size car as it had been known up to that point.

Critics of the Gas Guzzler Tax contend that the increased fuel economy of the US passenger car fleet observed since 1978 must be considered in the context of the increased market share of mid-size and full-size SUVs.

[5] Many consumers' stated reasons for SUV purchase (comfort, interior room, and a perception of safety based on the vehicle's size) also apply to the now-obsolete American full-size car as produced from the 1920s through the 70s; critics contend that the dominance of the modern SUV is a direct result of the Gas Guzzler Tax, which could have applied to all consumer vehicles but does not.