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(Solved): 13. In the United States, the payroll tax that funds Social Security and Medicare is collected from ...



13. In the United States, the payroll tax that funds Social Security and Medicare is collected from both workers and their employers. For every dollar earned, workers and employers each pay 7.65 cents in tax, for a total tax of 15.3 cents per dollar. Suppose that the government were to stop collecting any tax from workers and instead start collecting the entire tax of 15.3 cents per dollar solely from employers. In other words, for every dollar earned, the tax on workers becomes 0 cents and the tax on employers becomes 15.3 cents. How will this change in the payroll tax affect workers and firms?



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