When Egypt passed a law that imposed Social Security tax, it wanted employers and workers to share the burden of the tax equally. Most economists who have studied the incidence of the tax have concluded
A) the tax is not high enough to cover the future costs of Social Security.
B) the burden of the tax falls almost entirely on workers.
C) the tax on employers is too high because it reduces the employment of low -skilled workers.
D) the tax rate should be greater for high income workers than for low income workers.

Question

Quizplus · Accepted Answer

The incidence of a tax, according to most economists, often falls on the party less able to avoid it, which in the case of Social Security taxes, tends to be the workers. This is because employers can adjust wages or employment levels to offset their share of the tax burden, effectively passing the cost onto employees.

When Egypt Passed a Law That Imposed Social Security Tax