Tax incidence indicates
A. the burden of a tax on consumers.
B. the burden of a tax on producers.
C. who is legally required to send a tax payment to the government.
D. the actual division of the burden of a tax.
E. who is not legally required to send a tax payment to the government.
Do the people who are legally required to pay a tax always bear the burden of the tax? Briefly explain.
A. Yes. Those who are legally required to send a tax payment to the government bear the burden of the tax.
B. No. Those who are legally required to send a tax payment to the government never bear the burden of the tax.
C. No. Whoever bears the burden of the tax is not affected by who legally is required to pay the tax to the government.
D. No. Producers always bear the burden of the tax.
E. No. Consumers always bear the burden of the tax.
Answer (2)
Tax incidence defines who actually bears the burden of a tax, which can differ from the party legally required to pay it. Therefore, the burden may shift between consumers and producers, depending on various factors. Understanding this concept is essential for analyzing economic behavior regarding taxation. ;
Tax incidence refers to the actual division of the burden of a tax, which may differ from the party legally required to pay it. Thus, the correct answer to the first question is option D, and for the second question, option C is most accurate. This shows that producers may not bear the full burden, as it can shift to consumers depending on market dynamics.
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