We postponed a treatment of the question of incidence in connection with each tax, because the incidence of any tax depends upon its place in the system. It seems, therefore, better to treat the subject by itself in such a way that every tax can be considered in its connection with other taxes. The problems of this part of the subject are many and difficult. In an elementary treatise, all that can be done is to suggest methods of study and a very few of the more simple principles.

By the term " shifting " is meant the transference of the burden of a tax from the payer to some other person or persons. By the " final incidence " is meant the falling of the burden, without possibility of further shifting, upon some particular revenue, property, expenditure, or person. This may be illustrated by two very simple cases. An American bookseller in a college town imported some books from England for the use of the students. He paid the duty to the custom house, but collected it again from the students in the shape of an addition to the price of the books. The bookseller shifted the tax. The final incidence was on the students. In this case, the shifting was expected by the law-maker. It was to save the expense of hunting up and taxing each user of the books in question, that the seller was made to pay the tax, or to be the agent of the government in collecting it. Since the students thus taxed cannot shift the burden, we need not investigate this case further. Again : in California, the commonwealth and local taxes paid by the mortgagee amount on the average to about 1.75 per cent. The current rate of interest on the best untaxed loans, in and around San Francisco, is about 6 per cent, but on mortgages, in spite of the good security, it has been almost invariably 8 per cent, or more. In this case, the mortgagee shifts the tax, and its incidence is on the mortgagor. This may be its final incidence, or it may be possible for the mortgagor to shift the burden to the tenant of the mortgaged property in the shape of higher rents, or to the purchasers of the commodities raised on the property in higher prices. This last illustration shows how complicated the problem of incidence may be.