The Incidence of the Payroll Tax in the United States

Abstract

This study uses quarterly U.S. time-series data to measure the extent to which the payroll tax is shifted onto labor in the United States. A nonlinear labor demand model relating hours of work to a tax variable and other explanatory variables is estimated using ordinary least squares. The main conclusion of the study is that labor in the United States does not bear the primary burden of the payroll tax.