Tax shifting

Updated: Aug 20, 2021

The passing of the tax burden from one economic agent to another. For example, the burden of a sales tax that is formally levied on a firm may be passed on to consumers in the form of higher prices. Generally, the tax burden is shared between economic agents with the precise allocation determined by elasticities of demand and supply.

Reference: Oxford Press Dictonary of Economics, 5th edt.

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