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The incidence of a tax is the distribution among taxpayers of that particular tax's economic burden (i.e., the sacrifice of taxpayer utility or welfare). Tax incidence ignores distribution of any benefits received from government expenditures. Tax incidence, tax burden, and tax shifting are closely related notions. Statutory incidence is the initial distribution among taxpayers of a legal obligation to remit tax receipts to the government. Economic incidence is the final burden of that particular tax on the distribution of economic welfare in society. The difference between initial incidence and final incidence is tax shifting.

For example, the government may levy a tax on gasoline sales, typically as so much per gallon. Initially, this tax falls on the retail seller of gasoline, who is responsible for ...

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