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1. The incidence of a tax relates to the money burden of the tax, while the effects of a tax relate to its real burden.
2. It is the incidence of a tax that leads to its effects and not the other way.
3. The incidence of a tax can be shifted but the effects of a tax cannot be passed on to some other person.
4. Ceteris Paribus, the more elastic the demand for the taxed commodity, the more will be the incidence of the tax upon the seller,
5. Ceteris Paribus, the more elastic the supply of the taxed commodity, the more will be the incidence of the tax upon the buyer. First we take different elasticity’s of supply, given the elasticity of demand for the commodity. If the supply of a commodity is perfectly elastic, given its elasticity of demand, the entire money burden (incidence) of the tax will be upon the buyer.
Judiesiz answered the question on July 7, 2018 at 00:23
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