Business Commons^™

Payroll Tax Incidence: An Empirical Investigation Of Shifting The Payroll Tax Burden, Ted D. Englebrecht, Laurie J. Henry, Govind S. Iyer

Accounting Faculty Publications

The payroll tax earmarked for the financing of social security benefits has been the leading growth tax on small businesses over the past few decades. Small businesses pay more in payroll tax than in any other form of tax. Indeed, these taxes are levied on small businesses irrespective of their profits. The statutory incidence of one-half of the payroll tax being paid by the employer and one-half by the employee may be very different from the actual incidence of the tax due to employer shifting mechanisms.

While there has been considerable conjecture about the shifting of the payroll tax burden, …