Question

How are direct tax elastic ?

Answer 1

Tax incidence is the manner in which the tax burden is divided between buyers and sellers.

The tax incidence depends on the relative price elasticity of supply and demand. When supply is more elastic than demand, buyers bear most of the tax burden. When demand is more elastic than supply, producers bear most of the cost of the tax.

Answer 2

Direct taxes are economical, elasticand productive. ... It is elastic in the sense that the government can change rate of taxes according to its needs. Whenever income or wealth rises, the government takes appropriate measures to increase the rates ofdirect taxes.