Taxes are often targeted at individuals or companies, but how does the construct of the economy effect who actually pays the tax? An incidence of a tax is how the share of a tax falls on either the producer or consumer. More simply, the incidence of a tax is a measure that determines who pays the tax.

“Economics is the study of how individuals and societies choose to use the scarce resources that nature and previous generations have provided.” There are two important fundamentals outlined in the scholastic definition of Economics; resources are scarce and how resources are distributed is a product of choice. In all developed societies, access to resources is determined by volume of money (which itself is a scarce resource).