Sorry this is so late, but I honestly completely forgot about this after I wrote it, so I never came back to see what transpired.
Anyway, I’m aware of how the marginal propensity to consume affects tax incidence, but in this case, where payroll taxes apply to every employee at every business, the only choices involved are whether to work and whether to hire, and companies have far more leeway in that decision. You can avoid the fizzlesprot tax by consuming an untaxed equivalent or finding a different, fizzlesprotless sexual fetish. You can only avoid a payroll tax by being unemployed; in practice, I don’t think there is such a thing as one’s marginal job. By contrast, employers look at the tax as part of the cost of hiring an additional employee, and simply won’t hire the marginal worker if his or her cost is above the expected benefit. I can’t imagine a situation where any significant portion of a payroll tax (as opposed to the corporate income tax) falls on the employer, so I didn’t bring it up.
Hmm, and yet only two-thirds of the working age population chooses to work, and some of that is part-time, which reduces the amount of labor available to employers. Labor can also move between sectors, leaving some relatively starved of workers. People who accumulate enough savings can choose to retire early and have to be enticed back into the labor market with higher wages, if they can be enticed at all. That doesn’t look like a fixed supply of working hours that must be sold at any price—the supply looks somewhat elastic.
Edit: Sorry about the tone in my original comment—tax incidence doesn’t seem to be common knowledge and I failed to consider that you might be aware of it already.
Sorry this is so late, but I honestly completely forgot about this after I wrote it, so I never came back to see what transpired.
Anyway, I’m aware of how the marginal propensity to consume affects tax incidence, but in this case, where payroll taxes apply to every employee at every business, the only choices involved are whether to work and whether to hire, and companies have far more leeway in that decision. You can avoid the fizzlesprot tax by consuming an untaxed equivalent or finding a different, fizzlesprotless sexual fetish. You can only avoid a payroll tax by being unemployed; in practice, I don’t think there is such a thing as one’s marginal job. By contrast, employers look at the tax as part of the cost of hiring an additional employee, and simply won’t hire the marginal worker if his or her cost is above the expected benefit. I can’t imagine a situation where any significant portion of a payroll tax (as opposed to the corporate income tax) falls on the employer, so I didn’t bring it up.
Hmm, and yet only two-thirds of the working age population chooses to work, and some of that is part-time, which reduces the amount of labor available to employers. Labor can also move between sectors, leaving some relatively starved of workers. People who accumulate enough savings can choose to retire early and have to be enticed back into the labor market with higher wages, if they can be enticed at all. That doesn’t look like a fixed supply of working hours that must be sold at any price—the supply looks somewhat elastic.
Edit: Sorry about the tone in my original comment—tax incidence doesn’t seem to be common knowledge and I failed to consider that you might be aware of it already.