Saturday, January 5, 2008

Payroll tax

We can apply this logic to the payroll tax, which was discussed in the previous
case study. Most labor economists believe that the supply of labor is much less
elastic than the demand. This means that workers, rather than firms, bear most of
the burden of the payroll tax. In other words, the distribution of the tax burden is
not at all close to the fifty-fifty split that lawmakers intended.

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