Taxes and the consumer

Many people still believe that the burden of all taxes not levied directly upon the consumer is shifted to them. This theory can easily be disproved, and it has been repudiated by practically all taxation authorities. However, nearly all taxation authorities have so far believed that the burden of the taxes which really are shifted to the consumer and of those which are levied directly upon the consumer cannot be shifted by him but are borne by him. This theory is also unsound. In the first place, it is a mistake to assume that a tax which has been shifted to someone by means of some goods which he purchased can be passed on by him only by selling the goods in the same form in which he bought them. He may use these goods in producing other ones and can perhaps shift the tax farther just as readily by selling the goods he produced as he could have by selling those he bought. In the second place, most consumers who pay taxes are largely under the same type of economic circumstances as a commercial or a manufacturing business. They currently sell something and thus earn the funds which they spend for needed goods and services, and these goods and services are needed in earning additional funds which will be spent for the same purposes later on. Hence, most of the tax-paying consumers have the same means as manufacturing businesses have of shifting taxes passed to or levied directly upon them. Supplementary means of tax-shifting which organized labor can use-and has used-are collective bargaining or strikes or threats to strike.