Most of a payroll tax is eventually paid by:
A)employers if the supply curve of labor is very inelastic.
B)employers if the labor demand curve is unit elastic.
C)employees if the supply of labor curve is very inelastic.
D)employees if the supply of labor curve is very elastic.

Question

Quizplus · Accepted Answer

When the supply of labor is very inelastic, workers are relatively unresponsive to changes in wages, meaning they'll continue to work even if their take-home pay decreases due to higher taxes. Therefore, most of the payroll tax burden falls on employees in this scenario, as they are less likely to reduce their labor supply in response to the tax.

Most of a Payroll Tax Is Eventually Paid By