Journal Issue: Health Care Reform Volume 3 Number 2 Summer/Fall
1993 Applying Principles of Fairness to Possible Financing
Sources In analyzing who will bear the burdens of making health
care more affordable for children, attention should focus not on
how taxes are initially levied but on the relative incidence of
these taxes. Public finance economists who study burdens of
taxation distinguish between who is initially required to pay a
particular tax and who ultimately pays. The latter burden is
referred to as the incidence of the tax and is of most interest
here.19,20 For example, a payroll tax will be initially levied
on employers who must legally collect the receipts for the
government. Advocates of such a tax frequently assume that
employers bear the cost of this tax themselves. But most
economists agree that the actual burden of the tax rests on
employees in the form of lower wages or benefits;21 a few argue
that it is passed on to consumers in the form of higher prices
for goods and services. The incide