Given the structure and level of gross replacement rates and the expected future growth of labor earnings subject to the payroll tax, the tax rates used to tax payrolls were increased in the 1980s because:

Question

Quizplus · Accepted Answer

The increase in payroll tax rates in the 1980s was due to the expected increase in the number of retirees per worker. This means that there would be fewer workers contributing to the social security system while more retirees are receiving benefits, putting pressure on the system's financial sustainability. Increasing the tax rates was a way to offset the rise in costs and maintain the solvency of social security.

Given the Structure and Level of Gross Replacement Rates and the Expected