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The federal government stipulates that the 15.3% Social Security tax be evenly divided between workers and firms (each paying at a 7.65% rate). Why is this statutory distinction between workers irrelevant to the actual burden of the tax?

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Darryn D'Souza
Darryn D'SouzaLv10
28 Sep 2019

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Related questions

true or false, and please explain

a) the Federal Income Tax System in the United States is progressive, in the sense that higher incomes pay a higher share of their income in taxes.

b) why are Federal Excise taxes and Social Security payroll taxes regressive?

c) why should the optimal linear tax rate always be below the maximizing revernue tax rate?

d) suppose the government wants to maximize tax revernue collected from top bracket earners. How should the top marginal tax rate be set?

e) The uncompensated labor supply elasticity of male workers is small because high wage rate male workers work about the same hours as low wage rate male workers.

f) Income effect on labor supply are small because a majority of lottery winners continue to work after they win the lottery.

g) the best way to structure the transfer system is provide benefits to those with no earnings but then phase-out these benefits quickly as earnings increase.

46. In a proportional income tax system,

marginal tax rates increase as the level of taxable income increases.

marginal tax rates are the same regardless of the level of taxable income.

everyone pays the same dollar amount in taxes.

marginal tax rates decline as the level of taxable income declines.

47 A tax system that applies a lower marginal tax rate at higher levels of income is

backward.

regressive.

progressive.

proportional.

48 The average tax rate can be calculated by which of the following formulas?

The change in taxes due divided by the change in taxable income

The change in taxable income divided by the change in taxes due

Total taxable income divided by total taxes due

Total taxes due divided by total taxable income

49 Under a progressive income tax system, the marginal income tax rate paid by taxpayers

declines as their incomes increase

. is unrelated to their incomes.

rises as their incomes increase.

is unchanged as their incomes increase.

50 The tax base is the minimum amount of tax revenue that government must collect each year.

the maximum amount of tax revenue that government must collect each year.

the sum of all incomes earned in the United States.

the value of all goods, services, incomes, or wealth subject to taxation.

51 A capital gain is defined as the tax paid when one sells an asset.

the tax rate one pays when one moves into a higher tax bracket.

an unanticipated increase in income.

the positive difference between the sale price and the purchase price of an asset.

52 Corporate profits are

taxed twiceonce by the corporate tax system, and again by personal tax system when they are paid to stockholders as dividends.

taxed only when a stockholder sells his or her shares of stock.

taxed at too low a rate.

taxed three timesonce by the corporate tax system, again by the personal tax system, and again as capital gains.

53 Social Security taxes are regressive because

they apply only to rich people.

they are not applied to income beyond a certain amount.

they are applied to welfare recipients.

they are applied to retired people only.

54 The largest share of federal government tax receipts is derived from

excise taxes.

individual income taxes.

corporate income taxes.

social insurance contributions.

55 Local government expenditures depend on which taxes?

Social Security taxes

Local property, sales, and excise taxes

Capital gains taxes

Revenues from licenses and permits

56 When the purchase price of an asset is less than its sale price, then there is a

budget deficit.

corporate income tax.

capital gain.

capital loss.

57 The earnings that a corporation saves for investment in other productive activities are

transfers in kind. c

apital gains.

tax incidence.

retained earnings.

58 Tax incidence refers to

determining who sends the taxes into the government.

the distribution of tax burdens among groups, or who really pays a tax.

the tendency of some people to avoid paying taxes at all.

determining the marginal tax rate applied to any increase in income.

59 Social Security taxes are paid by

neither employers nor employees

both employers and employees.

employers only.

employees only.

Consider a hypothetical economy in which the labour force consists of 100 people. Of those, 85 people are employed full time and 15 people are unemployed. The government of this economy follows the same conventions as the BLS in computing its employment figures. The unemployment rate is simply the number of unemployed people divided by the number of people in the labour force. Initially, then, the unemployment rate is (15/100) x 100% = 15.0%
 
Suppose a reduction in foreign demand for this economy's products causes an economic recession-a prolonged period of declining output. The following table offers two different possible scenarios resulting from the recession. Calculate the unemployment rate associated with each scenario
 
2. Firms reduce work hours by 25%. The number of underemployed workers rises as firms respond to the reduction in the demand for their products by reducing the hours of each employed person from 40 to 30 hours per week.
 
A. 36.0%
B. 56.3%
C. 15.0%
D. 17.6%
 
3. Firms reduce employment by 25%. The number of unemployed workers rises as firms respond to the reduction in the demand for their products by laying off 21 previously employed workers.
 
A. 15.0%
B. 36.0%
C. 56.3%
D. 17.6%
 
4. The unemployment rate in scenario 3 ____ the true extent of underemployment in the economy because the BLS counts part-time workers as employed.
 
A. Overstates
B. Understates
 
5. Consider a hypothetical economy in which potential output is $400 billion and the natural rate of unemployment is 6%. The current employment rate is 7.4%. Since the unemployment rate is greater than the natural rate of unemployment, the economy's actual GDP will be ____ potential GDP.
 
A. Less than
B. Greater than
C. Equal to
 
6. The burden of an increase in the economy-wide unemployment rate can differ widely across regions and different groups of people. For example, in the United States, the jobless rate among minorities has tended to be ___ than the jobless rate among whites.
 
A. Lower
B. Higher

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