Tax incidence falls mostly upon the group that responds least to price, or has the most inelastic price-quantity curve.
Analyze how changes in taxes affect the price of a good for sellers and buyers
Tax incidence is the effect a particular tax has on the two parties of a transaction; the producer that makes the good and the consumer that buys it. The burden of the tax is not dependent on whether the state collects the revenue from the producer or consumer, but on the price elasticity of supply and the price elasticity of demand. To understand how elasticities influence tax incidence, its important to consider the two extreme scenarios and how the tax burden is distributed between the two parties.