In
economics,
tax incidence or
tax burden is the analysis of the effect of a particular
tax on the distribution of
economic welfare. Tax incidence is said to "fall" upon the group that ultimately bears the burden of, or ultimately has to pay, the tax. The key concept is that the tax incidence or tax burden does not depend on where the revenue is collected, but on the
price elasticity of demand and
price elasticity of supply. The concept was brought to attention by the French
Physiocrats and in particular
François Quesnay who argued that the incidence of all taxation falls ultimately on landowners and is at the expense of land rent. For this reason they advocated the replacement of the multiplicity of contemporary taxes by the Impôt Unique, which is similar to what would later be known by
Georgists as a
'Single-Tax' on land value. A leading advocate of this tax was
Turgot. Physiocrats were correct in their analysis of the tax incidence of
land value tax, that it benefits society and falls entirely on landlords. However, they were incorrect in believing that the entire incidence of those indirect taxes would fall on landowners. Even though the incidence of taxes on activities such as consumer sales or employment will lower land values indirectly, maybe by even more than the value of the original tax, some excess burden is likely to also fall on consumers and producers.