Suppose the government were to tax all car wash businesses in your town. Assume that the demand for car washes is perfectly elastic, the supply of car wash employees is perfectly elastic in the short run, and the supply and demand of capital (i.e., the car wash equipment) is elastic (but not perfectly so) in the short run and perfectly elastic in the long run. According to general equilibrium tax incidence analysis, _____ bear the tax in the short run, and _____ bear the tax in the long run.
