Tax burden is also known as Tax incidence. Economics view it as the effect of a particular tax  on the distribution of economic welfare. In simple terms, tax burden is the amount of tax paid by a person, company, or country over a specified period in relation to the total income generated in that period. Tax burden is usually assumed to fall upon whoever will ultimately bear the tax burden. In other words, payment (burden) of tax can be shifted from one person to another. For example, the government may decide to increase Valued Added Tax(VAT) rate on cigarettes sold; the producers can effectively increase the price of the cigarettes to accommodate the increase of tax. In such instance, the consumers of cigarettes would ultimately bear the burden of paying the increase in taxation.


Several forms of tax exist and each form as a targeted sector of persons. Some of the taxes and the purposes for which persons bear the burden of paying would be succinctly examined below.

Income Tax

The income taxes are usually levied on personal and businesses generated revenue. Notably, income taxes are mostly always progressive (high income attract higher tax rates and lower income means lower taxrates). The following are forms of income tax;

i. Capital Gains tax: They are paid on any profit made from the sale of assets. Assets are Objects of value that one possesses.
ii. Estate taxes: They are imposed on the transfer of property upon the death of the owner. Sometimes it’s known as Inheritance Tax.Interestingly, some view it as Death Taxes on grounds that they are unfair confiscation of wealth passed onto an heir.  A tax related and assessed like the estate tax is the Gift tax, levied on a transfer of wealth during a persons lifetime.

Property Tax

Property tax is sometimes known as Advalorem tax, it is imposed on the value of real estate or other personal property. Property taxes are usually imposed by the local government and charged on a recurring basis.

Sales Tax

It’s often used by the government to raise revenue. Purchases made at the retail level are assessed at a percentage of the sales price of a particular item. Some believe the sales taxes are the most equitable form of taxation, since they are essentially voluntary and they extract more money from those who consume more. Others believe they are the most regressive form of taxation, since poorer people end up paying a larger portion of their income in sales tax than wealthier individuals do. The following are forms of sales tax.

i. Excise taxes are based on the quantity of the item and not its value.
ii. User fees are taxes that are assessed on a wide variety of services including airline tickets.
iii. Sin taxes are imposed on items whose consumption in excess is harmful like cigarettes and alcohol.
iiii. Luxury taxes are imposed on certain items, such as expensive jewelries and cars.


Ultimately, the person that bears the burden of tax and those on whomit’s initially imposed differs. Thus, an individual on whom the tax is levied does not have to bear the true size of the tax.

You may also like...