For environmental reasons, taxes on energy have developed a large following. Legislation introduced to amend the Internal Revenue Code of 1986, H.R. 1086, would tax crude petroleum, natural gas and coal on the basis of their carbon contents. The purpose of this research is to examine the efficiency and equity of various energy tax schemes. Researchers will construct a static, partial equilibrium model of household energy consumption for four types of energy products. The model will differentiate household demand by region, age of household head and income. The household model will then be linked to detailed electricity and petroleum pricing models. Researchers will consider alternatives to a single nation-wide tax on carbon. For each state, the social cost of H.R. 1086 will be calculated and compared with other measures of social cost. Estimates will then be compared to each state's reduction in household carbon dioxide emissions. This analysis will suggest how much carbon dioxide reduction is gained per dollar of social cost. Comparing H.R. 1086 with each state's least cost tax plan will identify the inefficiency in H.R. 1086. Finally, researchers will produce a second set of state taxes that attains the same emission reduction target and equalize household social cost. The aggregate social cost for this equity scheme will then be compared to the least cost plan and H.R. 1086.