Lawmakers can decide whether the buyers or the sellers must send a tax to the government, but they cannot legislate the true burden of a tax.

Question

Quizplus · Accepted Answer

The true burden of a tax, or tax incidence, is determined by market forces such as the elasticity of supply and demand, not by legislation. Lawmakers can decide who legally remits the tax, but the economic burden is distributed according to the relative elasticities of supply and demand.

Lawmakers Can Decide Whether the Buyers or the Sellers Must