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Home Publications Who pays taxes? A short introduction to tax incidence

Who pays taxes? A short introduction to tax incidence

Journal article | Economic Review

Who pays taxes? This may sound like a simple question, but many politicians don't seem to know the answer. Nor do a great many journalists. In fact, if there's one important economic concept which almost no-one in the general public seems to understand, it's 'tax-incidence' - the economic study of who really pays taxes.

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The UK taxes business income at much lower rates than employment income. In this paper we describe the problems caused by that differentiation and assess the main arguments used to defend it. We summarise the Mirrlees Review’s proposals for radical reform that would align tax rates across legal ...