Tax Incidence

Tax incidence refers to who actually pays a tax. Here the word ""incidence" is used is the sense of "affects" or "influences".

For example, if the government imposes a 35% tax on corporations, who actually pays the tax? It is possible that consumers will pay, in terms of higher prices. In the deadweight loss article, some people pay for a payroll tax in the form of lost jobs. See the Wikipedia entry on tax incidence.

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