Final answer:
Tax incidence is the distribution of tax burdens among various groups in society. It is distinct from a proportional tax, which levies a flat tax rate on all income levels, and a regressive tax, where high-income groups pay a smaller share of their income compared to low-income groups.
Step-by-step explanation:
The distributions of tax burdens among various groups in society is known as tax incidence. Tax incidence refers to how the burden of a tax is distributed between consumers and producers or among various income groups in society. Understanding tax incidence is important for evaluating the equity and effectiveness of a tax system.
In contrast to tax incidence, a proportional tax is a tax that is a flat percentage of income earned, regardless of the level of income. This means that everyone pays the same proportion of their income, no matter how much they earn. Conversely, a regressive tax is where those with higher incomes pay a smaller percentage of their income in tax compared to those with lower incomes. These concepts are crucial in discussions about tax policy and its impact on different income groups.