San Diego Law Review

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The standard traditionally employed by tax theorists in assessing the federal income tax is equity, but a new generation of theorists argues that ostensible inequities are converted by the market into inefficiencies. These opposing theories are based on divergent behavioral assumptions: equity theorists usually assume that the economic burden of the tax falls on the nominal taxpayer, while efficiency theorists usually assume that the burden is partly or wholly shifted by the nominal taxpayer to customers, suppliers, or others. This article examines the relationship of these conflicting assumptions to the conclusions reached by equity and efficiency theorists.

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