Suppose a tax on wages is passed to finance a government program. The legislation orders a tax of 12.4% on per hour wage earnings with 6.2% to be paid by employers and 6.2% to be paid by workers. Assume labor supply is more inelastic than labor demand. Under these assumptions, describe the statutory burden of the tax? a.The statutory burden is fully on workers. b. The statutory burden is fully on employers. c. The statutory burden is distributed in equal amounts to workers and employers. d. The statutory burden cannot be determined.
Suppose a tax on wages is passed to finance a government program. The legislation orders a tax of 12.4% on per hour wage earnings with 6.2% to be paid by employers and 6.2% to be paid by workers. Assume labor supply is more inelastic than labor demand. Under these assumptions, describe the statutory burden of the tax? a.The statutory burden is fully on workers. b. The statutory burden is fully on employers. c. The statutory burden is distributed in equal amounts to workers and employers. d. The statutory burden cannot be determined.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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1. Suppose a tax on wages is passed to finance a government program. The legislation orders a tax of 12.4% on per hour wage earnings with 6.2% to be paid by employers and 6.2% to be paid by workers. Assume labor supply is more inelastic than labor demand. Under these assumptions, describe the statutory burden of the tax?
a.The statutory burden is fully on workers.
b. The statutory burden is fully on employers.
c. The statutory burden is distributed in equal amounts to workers and employers.
d. The statutory burden cannot be determined.
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