Tax Liability Side Equivalence and Time Delayed Externalities

Past experimental research suggests that taxes levied on the buyer side are sometimes perceived as more acceptable than equivalent taxes levied on the seller side, violating the well-known Tax Liability-Side Equivalence Principle. This paper tests whether the statutory incidence of the tax mitigates the negative impact of delayed externality on public support for Pigouvian taxation. We show that the delay effect is robust regardless of the side the tax is levied on and regardless of whether buyers display a tax shifting bias.