Theoretical Measures of Tax Incidence
Three distinct theoretical measures of incidence commonly appear in the literature: incidence as impact, incidence as changes in certain relative prices, and incidence as changes in welfare.
Impact Equals Incidence
Some research merely reports the pattern of tax payments by income class and judges the equity of the tax on this basis alone, thereby equating the impact and incidence of the tax. As noted above, most incidence studies of the personal income tax employ this measure, on the (inappropriate) assumption that income taxes are essentially lump sum. For example, Joseph Pechman and Bernard Okner allocate personal income-tax burdens in this manner in their widely cited Brookings studies, Who Bears the Tax ...