ABSTRACT
Referring to the classical theory of incidence, authors argued that enhancing direct taxes would have but little effect on the price level. They see large and enterprising businesses, concerns which give employment to many hundreds of thousands of persons, able and willing to enlarge and develop their activities, curbed and frustrated by taxation which is positively penal in its incidence. While the incidence of taxation on traders in certain specified geographical areas is not as great as that of other American citizens, sound competitive and political reasons have dictated the advantage. Inflation has also forced upon the Israeli Government some stop-gap measures which have altered the incidence of taxation a little, e.g. premia on output and the cost-of-living allowance from January, 1952, based on the new index and on the agreement between the employers and employees, are partly exempt from taxation.
