The economics of tax incidence concerns the question of who ultimately bears the burden of taxation—whether it falls on consumers, workers, or producers—and under what conditions that burden shifts between them. It is a foundational topic in public economics, tracing back to the work of early classical economists such as David Ricardo, John Stuart Mill, and later formalised within the marginalist revolution of the late nineteenth and early twentieth centuries. The key insight is that the party legally responsible for paying a tax is not necessarily the one who bears its economic cost. Rather, the incidence of a tax depends on the relative elasticities of supply and demand in the market affected.
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