[This is part of the series: The Complete Guide To Economics 101.]
What is tax incidence in economics?
Tax Incidence is just another way of saying tax burden.
It is studying who bears the burden of a new, or existing, tax.
Who pays for a new tax is often the result of the elasticity of a particular good or service.
For example, a new tax on cigarettes might be paid more by customers – since cigarette consumption is less sensitive to changes in price.
And a new tax on yachts might be paid more by producers – since yacht consumption is more sensitive to changes in price.