Problem:
The federal Insurance Contributions Act (FICA) tax is a payroll tax that finances Social Security and MEdicare. By law, employees each contribute 7.65% of the employees wages toward the programs. Note that the tax rate is 15.3% of wages and the tax payments are equally divided between employers and employees.
Would an economists say that the burden of the FICA tax is shared equally? Why or why not?
Who bears more of the tax burden? Workers or employers? Use supply and demand curves to illustrate your answer.