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Investments glossary

Tax Incidence


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Quotes of the day:

Truth may be stretched, but cannot be broken, and always gets above falsehood, as oil does above water.

— Miguel de Cervantes

Tax incidence (or incidence of tax) is an economic term for understanding the division of a tax burden between stakeholders, such as buyers and sellers or producers and consumers. Tax incidence can also be 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.

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