How is the incidence of a tax determined
A)It is not required when one is only interested in issues of equity.
B)It is identical to the determination of legal liability for a tax.
C)It requires one to evaluate where the tax burden eventually falls.
D)It is solely determined by conditions of the "flypaper theory" of taxation.

Question

Quizplus · Accepted Answer

The incidence of a tax refers to who ultimately bears the burden of the tax. It is determined by evaluating where the tax burden eventually falls, which is affected by factors such as elasticity of demand, supply, and the ability of individuals and businesses to shift the burden onto others. Therefore, choice C is the correct answer. The other options are incorrect.

How Is the Incidence of a Tax Determined