Summary in haiku form
Where does the tax burden fall?
Don’t ask a lawyer.
Summary in one paragraph
Lawyers determine the legal incidence of taxes—i.e., who formally pays the taxes—but the forces of supply and demand determine the economic incidence of taxes, i.e., who ultimately bears the burden. In fact, the tax equivalence result says that a tax on the sellers produces the same economic outcome as an equivalent tax on the buyers, meaning that the Social Security tax—which is legally divided between employees and employers—would have the same economic outcome even if it were placed entirely on one side or the other. As we’ll see in Chapter 14, in many markets the long-run economic burden of taxes falls entirely on the buyers.
Notes on specific pages
Carbon taxes
Social Security
