If the tax on the sale of gasoline is doubled from 20 cents per gallon to 40 cents per gallon, the excess burden of the tax will quadruple.

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The excess burden of a tax is determined by the difference between the amount that consumers are willing to pay for a good and the amount that producers are willing to sell it for. When the tax on gasoline is doubled, the price that consumers pay for gasoline increases by the amount of the tax, which reduces the quantity of gasoline sold. This reduction in quantity creates deadweight loss, or excess burden, as consumers and producers are no longer able to trade in the amount that they would have at the pre-tax price. Since the tax increases by 20 cents per gallon, the reduction in quantity would be greater than if the tax had only increased by 10 cents per gallon (doubling the 20 cent tax), leading to a quadrupling of the excess burden.

If the Tax on the Sale of Gasoline Is Doubled