3 ms·

This is not evidence that payroll taxes are borne solely by the worker. I'm not claiming that workers don't bear any of the burden. Just that they don't bear al

by dlp211 6y ago

This is not evidence that payroll taxes are borne solely by the worker. I'm not claiming that workers don't bear any of the burden. Just that they don't bear all of the burden. this would be especially true in an asymmetrical payroll tax system in competitive labor markets like the Seattle Software Developer market.

jedberg 6y ago
I'm not sure how a competitive labor market makes any difference. They all have to pay the same payroll taxes. If anything it's a great equalizer -- all companies must bear that employee cost. So they will all take it out of their employee's earnings equally.
- dlp211 6y ago
  In this context, we are talking about the Seattle Head tax, which is NOT applied equally. In the larger discussion of payroll taxes, to disprove that workers bear the entire burden of payroll taxes, just go through the thought experiment where we eliminate the employer side of the SS tax and whether wages would rise 6.2%. They wouldn't. Workers were willing to work for $N previously, there is no reason that they would stop working/change jobs unless they were paid $N + 6.2%.
  - jedberg 6y ago
    Of course salaries wouldn't go up. Because you removed the cost from the equation. But now do the thought experiment where the employee must explicitly pay the extra 6.2%. Now of course you have to give them a 6.2% raise, because they would demand it to cover their increased costs.
    - dlp211 6y ago
      In your thought experiment the cost isn't being borne by the worker, it's being borne by the business.
      - jedberg 6y ago
        No it isn't. Numbers: I pay the worker $10000 a month. Let's say my tax cost is $500 a month, and their tax cost is $500/mo. So they get a check for $9500, they see a $500 tax deduction, and they net $9000. My all in cost is $10000. Now the city says "you don't have to pay your part of the tax anymore, the worker does!" So now I pay them $10000, they see a deduction of $1000 on their paycheck, and net $9000. My all in cost is still $10000, their net is still $9000. Nothing has changed. I'm still paying $10000 to have that worker. And if my budget is 100000, I can still only afford 10 workers.

by dlp211 6y ago

jedberg 6y ago

I'm not sure how a competitive labor market makes any difference. They all have to pay the same payroll taxes. If anything it's a great equalizer -- all companies must bear that employee cost. So they will all take it out of their employee's earnings equally.

dlp211 6y ago
In this context, we are talking about the Seattle Head tax, which is NOT applied equally. In the larger discussion of payroll taxes, to disprove that workers bear the entire burden of payroll taxes, just go through the thought experiment where we eliminate the employer side of the SS tax and whether wages would rise 6.2%. They wouldn't. Workers were willing to work for $N previously, there is no reason that they would stop working/change jobs unless they were paid $N + 6.2%.
- jedberg 6y ago
  Of course salaries wouldn't go up. Because you removed the cost from the equation. But now do the thought experiment where the employee must explicitly pay the extra 6.2%. Now of course you have to give them a 6.2% raise, because they would demand it to cover their increased costs.
  - dlp211 6y ago
    In your thought experiment the cost isn't being borne by the worker, it's being borne by the business.
    - jedberg 6y ago
      No it isn't. Numbers: I pay the worker $10000 a month. Let's say my tax cost is $500 a month, and their tax cost is $500/mo. So they get a check for $9500, they see a $500 tax deduction, and they net $9000. My all in cost is $10000. Now the city says "you don't have to pay your part of the tax anymore, the worker does!" So now I pay them $10000, they see a deduction of $1000 on their paycheck, and net $9000. My all in cost is still $10000, their net is still $9000. Nothing has changed. I'm still paying $10000 to have that worker. And if my budget is 100000, I can still only afford 10 workers.