The federal payroll tax deductions (CPP and EI)fall most heavily on workers because the price elasticity of demand for labour is greater than the price elasticity of supply of labour.

Question

Quizplus · Accepted Answer

The price elasticity of demand for labour is greater than the price elasticity of supply of labour, which means that when payroll taxes are deducted from workers' paychecks, they bear most of the burden as employers are less likely to decrease the number of workers they employ in response to the tax. Thus, the statement is true.

The Federal Payroll Tax Deductions (CPP and EI)fall Most Heavily