what would happen theoretically if employers payed all of the payroll taxes?

Question

would the burden by eventually transferred to employees?
would employers hire less people?

Answer 1

In the long run, it doesn't really matter much whether the employer or the employee is charged with the tax bill. The net wage that you get will be the same because the employer has to set his wage rates to what he can afford to pay. If he's paying more taxes, he's paying less wages.

Answer 2

This is a question about shifting the incidence of taxation. The most likely result in my opinion is that, over time, wage increases would be scaled back until the net cost to the employer is absorbed. In other words, the burden would be transferred to employees. This relates to the economy as a whole, not necessarily each employer. However, one can imagine a situation in which the employer is unable to transfer the burden to the affected employees -- such as in the case of employees earning minimum wage -- in which case the burden might be shifted to higher-paid employees, or to other sectors such as consumers. Since employers tend to look at payroll cost as a lump sum, hiring fewer people might also be an option -- perhaps by making the decision to automate certain functions that were previously done by hand.

Answer 3

Everyone's pay rate would go down (or fail to go up) by the amount of the tax. Employers don't pay payroll taxes any more than stores pay income taxes. The cost is always passed on to employees/customers.

Answer 4

Well, the federal government wouldnt let it work like that firstly. The business already pays taxes and they also match your FICO contribution (none of which is visible to you). And then there are individual taxes, which is what you see partially witheld out of your paycheck. The government isnt just going to get rid of individual taxes. And the effects of increasing taxes on employers wouldbe quite bad. It would increase the costs of hiring employees, so business would hire less, charge more to offset the additional costs, and would be a lot more likely to pick up their operations and move them to countries smart enough to not do something like that, and then would just export their products in to the US. Lets not propose making the business climate in the US even more business unfriendly- we would like to try to keep some of our American jobs in the USA.

Answer 5

Nothing different. In reality, any taxes withheld from your paycheck and paid to the federal or state government along with your portion and your employer's matching portion of social security and medicare taxes has already been paid by your employer, since they are the source of your gross earnings. However, if employers had to pay you your gross wages and then still had to pay taxes on top of that, then the additional cost would have to be passed on as a cost of products or services to their customers, otherwise it would result in lower earnings or losses to their owners or shareholders.

Answer 6

I can see two things happening
1- I will have m ore money left on my pay ck.
2-Be ready to pay more for products or services.
You know what? At the end we will paying more