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

Question

Quizplus · Accepted Answer

When the supply of labor curve is very inelastic, it means that workers are not able to adjust their labor supply based on changes in wages. In this case, employers can shift most of the burden of a payroll tax onto the workers in the form of lower wages. Therefore, most of the tax is eventually paid by the workers.

Most of a Payroll Tax Is Eventually Paid by