In order to determine tax incidence, one must
A)consider issues of equity.
B)also determine the legal liability of the tax.
C)evaluate where the tax burden eventually falls.
D)use the "flypaper theory" of taxation.

Question

Quizplus · Accepted Answer

Tax incidence refers to the final burden of a tax, which is paid by either the consumer or the producer. In order to determine tax incidence, it is important to evaluate where the tax burden eventually falls. Considering issues of equity and determining the legal liability of the tax are also important factors, but they do not specifically address the issue of tax incidence. The "flypaper theory" of taxation is not relevant to determining tax incidence.

In Order to Determine Tax Incidence, One Must