Question of the Day
Who bears the economic burden of Social Security and Medicare payroll taxes paid by businesses?
The payroll taxes paid by businesses are mainly borne by employees in the form of lower wages. As explained by the U.S. Government Accountability Office (and many other credible sources), "While employees and employers pay equal amounts in social insurance taxes, economists generally agree that employees bear the entire burden of social insurance taxes in the form of reduced wages." This is evidenced by the fact that workers' average wages and benefits (including payroll taxes paid by businesses) have increased at the same rate for all of modern U.S. history except for a passing two-year blip during the presidency of George W. Bush and during most of the presidency of Barack Obama. In this era, massive government interventions like quantitative easing distorted the nation's economy.