-The figure above shows the labor supply and labor demand curves for personal trainers in the state of Florida.The initial equilibrium hourly wage is $10.Suppose the state of Florida institutes an income tax on labor income of $6 an hour in order to buy voting machines for the next election.How much of the tax is paid by employees?

Question

Quizplus · Accepted Answer

When a tax is imposed on labor income, the burden of the tax is shared between employers and employees, depending on the elasticities of supply and demand for labor. The actual amount paid by employees (or the incidence of tax on employees) depends on how the tax affects the equilibrium wage. Since the question does not provide specific details on the shifts in supply and demand curves, we cannot calculate the exact figures. However, in practice, the tax burden is rarely borne entirely by one side; it is typically split between employers and employees. Without specific data, the most reasonable assumption is that employees would bear some, but not all, of the tax burden, making $2 a plausible share considering the options given.

-The Figure Above Shows the Labor Supply and Labor Demand