Suppose There Is a Payroll Tax Placed on Firms

question 12

Multiple Choice

Suppose there is a payroll tax placed on firms.If labor supply is perfectly elastic,then

• A) firms and workers will split the payroll tax 50-50.
• B) workers will bear 75% of the tax burden.
• C) workers will bear 100% of the tax burden.
• D) firms will bear 100% of the tax burden.
• E) firms will bear 75% of the tax burden.

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Definitions:

Claim

A demand for something due or believed to be due, typically a request for payment in accordance with an insurance policy or other formal agreement.

Involuntary Petition

A legal process initiated by creditors requesting a court to declare a debtor bankrupt when the debtor hasn't voluntarily filed for bankruptcy.

Order for Relief

A court order in bankruptcy proceedings that grants the petitioner, usually a debtor, protection from creditors and sanctions the commencement of bankruptcy proceedings.

Fraudulent Transfer

The act of illegally transferring property to another party in order to evade creditors or the law.