The flypaper theory of tax incidence is a pejorative term used by economists to describe the assumption that the burden of a tax, like a fly on flypaper, sticks wherever it first lands.
Economists point out several flaws with the assumption:[citation needed] For example, consider a tax levied on a luxury item such as jewelry.
Such a tax, while intended to target the wealthy, may not actually accomplish this objective, as the wealthy can simply choose to buy less jewelry.
As another example, suppose a tax is levied on the sellers of a product.
This should not be confused with the flypaper effect, which holds that money from a federal authority to a state authority tends to increase overall expenditure rather than merely substitute for locally-raised revenue.