When workers earn income, they and their employer pay equal portions of FICA (the Federal Insurance Contributions Act). Which of the following statements is TRUE?

Question

Quizplus · Accepted Answer

The worker bears almost all of the burden of the tax because the economic incidence of a tax depends on the relative elasticities of supply and demand, not the statutory incidence. In labor markets, labor supply is generally less elastic than labor demand, meaning workers bear most of the tax burden.

When Workers Earn Income, They and Their Employer Pay Equal