According to the 2004 Economic Report of the President: "Another crucial principleof tax incidence is that only people can pay taxes. Businesses and other artificial entities cannot paytaxes." Is this statement correct orincorrect?

A- Correct. The tax is borne by the workers in the form of lowerwages, the customers in the form of higherprices, and the shareholders in the form of lower returns.

B- Incorrect. Firms pay federal and state corporate income tax.

C- Correct. The tax is borne by the customers in the form of higher prices.

D- Incorrect. A corporation is treated like a living entity and as such pays taxes. Forexample, federal corporate income tax