- Tax Incidence
- An economic term for the division of a tax burden between buyers and sellers. Tax incidence is related to the price elasticity of supply and demand. When supply is more elastic than demand, the tax burden falls on the buyers. If demand is more elastic than supply, producers will bear the cost of the tax.
Tax incidence reveals which group, the consumers or producers, will pay the price of a new tax. For example, the demand for cigarettes is fairly inelastic, which means that despite changes in price, the demand for cigarettes will remain relatively constant. Let's imagine the government decided to impose an increased tax on cigarettes. In this case, the producers may increase the sale price by the full amount of the tax. If consumers still purchased cigarettes in the same amount after the increase in price, it would be said that the tax incidence fell entirely on the buyers.
Investment dictionary. Academic. 2012.
Look at other dictionaries:
Tax incidence — In economics, tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare. Tax incidence is said to fall upon the group that, at the end of the day, bears the burden of the tax. The key concept is that… … Wikipedia
incidence — in‧ci‧dence [ˈɪnsdns] noun [singular] 1. TAX the effect of a particular tax on people or organizations, and how much they have to pay: • The structure of production may influence the incidence of taxation. 2. the number of times something… … Financial and business terms
Tax avoidance and tax evasion — Tax avoidance is the legal utilization of the tax regime to one s own advantage, in order to reduce the amount of tax that is payable by means that are within the law. By contrast tax evasion is the general term for efforts to not pay taxes by… … Wikipedia
Tax policy — is the government s approach to taxation, both from the practical and normative side of the question.PhilosophyPolicymakers debate the nature of the tax structure they plan to implement (i.e., how progressive or regressive) and how they might… … Wikipedia
Tax — Taxation An aspect of fiscal policy … Wikipedia
Tax noncompliance — Taxation An aspect of fiscal policy … Wikipedia
Tax rate — For a type of taxation system in the United Kingdom and elsewhere, see Rates (tax). Taxation An aspect of fiscal policy … Wikipedia
Tax deduction — This article is about the deduction of expenses for the purpose of calculating taxable income. For tax deducted at source, see Withholding tax. Taxation An aspect of fiscal policy … Wikipedia
Tax treaty — Taxation An aspect of fiscal policy … Wikipedia
Tax rates around the world — Taxation An aspect of fiscal policy … Wikipedia