If a tax is imposed on buyers in a market, what is the effect on the distribution of the tax burden?

Show Answers

Buyers end up shouldering the majority of the tax cost.The entire tax responsibility is carried by the buyers.Sellers are the ones who ultimately pay the tax.The division of the tax burden between buyers and sellers is identical to that of a tax imposed on sellers.Only sellers experience any impact from the tax.

Explanation

Whether a tax is levied on buyers or sellers, the economic incidence—the actual division of the tax burden between buyers and sellers—remains the same. This means that taxing buyers results in the same distribution of tax burden as taxing sellers.