We’ve posted a new “Fiscal Fact” to the website explaining the difference between Census Bureau state and local tax collections figures, and Tax Foundation tax burdens. They key difference lies in the treatment of “tax incidence.” Census figures measure who is legally required to make tax payments—what economists call the “legal incidence” of a tax—while Tax Foundation tax burdens attempt to measure who actually bears the economic burden, or the “economic incidence,” of taxes. This distinction is an old one, dating back at least to the 19th Century French Physiocrats. Yet it is surprising how often it is ignored in modern tax policy debates. Click here to read the full piece.
