In January 2013 the Social Security payroll tax increased by 2 percentage points. This rise in the Social Security payroll tax ________ the U.S tax wedge.

Question

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The tax wedge is the difference between the amount a worker takes home and the amount it costs to employ that worker, which includes taxes. An increase in the Social Security payroll tax directly increases the tax wedge by raising the cost of employment without increasing the worker's take-home pay.

In January 2013 the Social Security Payroll Tax Increased by 2