Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 6 - Part II - Supply, Demand, and Government Policies - Problems and Applications - Page 130: 5

Answer

No, this would not accomplish the senator's goal.

Work Step by Step

Lawmakers cannot easily say how a tax burden will be distributed. If the payroll tax on employers was increased, then the wages received by workers fall, and the wages paid by companies increase. The division of the tax burden would be higher on companies than employees, and the same outcome would happen if lawmakers shifted the entire payroll tax to either companies or to employees.
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