// definition
Tax incidence
The economic distribution of a tax burden
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Short definition
The ultimate economic distribution of a tax burden across participants. It may differ from the identity of the legally liable payer. For a tariff, price and margin adjustments can distribute the burden among suppliers, importers and customers. That distribution depends on market conditions and must be estimated.
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Knowledge map
Intuition
The party remitting a tax and those bearing its economic cost can be different.
Primary sources
- 19 CFR § 141.1The importer’s customs obligation.
- Federal Reserve, tariff pass-throughEstimated consumer-price effects of tariff changes.