Explanation The tax is the unilateral payment from the people to the government. Tax is the main source of income of the government which can be used for carrying on the public expenditure of the government. The main types of taxes include the income tax, wealth tax and the professional tax which constitutes for the one third of the total tax revenue of the government. When the pay roll tax is imposed and is collected from the employer, the employer has to the tax for every hour he uses a labor. This will lead to extra expenditure to the employer and as a result of the tax, and the employer would reduce the demand for labor. Thus, the demand curve for labor by the employer would shift downwards with the amount of tax which is equal to $1...

MyLab Economics with Pearson eText -- Access Card -- for Microeconomics

6th Edition

ISBN: 9780134125886

Author: R. Glenn Hubbard, Anthony Patrick O'Brien

Publisher: PEARSON

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Price Ceilings and Price Floors

Price Ceilings and Price Floors strategy is used by the Government to control the prices of certain goods and services in the market. This method helps the Government to protect the interests of both buyers and suppliers in difficult economic times.

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Chapter 4, Problem 4.4.10PA

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The impact of payroll tax on workers and employers.

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D The following graph gives the labor market for laboratory aides in the imaginary country of Sophos. The equilibrium hourly wage is $10, and the equilibrium number of laboratory aides is 250. Suppose the federal government of Sophos has decided to institute an hourly payroll tax of $4 on laboratory aides and wants to determine whether the tax should be levied on the workers, the employers, or both (in such a way that half the tax is collected from each party). Use the graph input tool to evaluate these three proposals. Entering a number into the Tax Levied on Employers field (initially set at zero dollars per hour) shifts the demand curve down by the amount you enter, and entering a number into the Tax Levied on Workers field (initially set at zero dollars per hour) shifts the supply curve up by the amount you enter. To determine the before-tax wage for each tax proposal, adjust the amount in the Wage field until the quantity of labor supplied equals the quantity of labor demanded.…

Will an increase in the minimum wage cause a shift in the demand curve for unskilled labor? Will an increase in the minimum wage cause a shift in the supply curve for unskilled labor? Briefly explain your answers.

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MyLab Economics with Pearson eText -- Access Card -- for Microeconomics

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The impact of payroll tax on workers and employers.

Solution Summary: The author explains the impact of payroll tax on workers and employers. It is the unilateral payment from the people towards the government.

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The impact of payroll tax on workers and employers.

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