Economic burden of FICA Business & Marketing Research Paper (Research Paper Sample)

Economic Burden of the FICA Tax Case Study
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Outline
* Introduction
* Discussion
* The bearers of the economic burden
* The tax incidence approach and economic principles
* Shift of economic burden in relation to unemployment changes
* Effects of different taxation methods
* Conclusion
Introduction
Governments usually require taxes in order to meet expenses such as healthcare, security, and other public requirements. To raise the revenue, the government imposes taxes on goods and services as well as on the wages and salaries that employers and employees earn. In essence, payroll tax, such as Federal Insurance Contributions Act (FICA), is a form of tax imposed on the wages that employees receive from a given firm. The tax appears as a deduction on the employee’s gross salary or wages. To minimize the effects of the tax on the employees, the government can at times impose laws that compel the employers to pay half of the tax. As a result, the employers pay half of the tax and the employees experience minimal deductions from their payrolls, which represent half of the total payroll tax. Presently, the payroll tax in the United States is 7.65% for the workers and the employers. It is within this context that the study explains the bearers of the economic burden of the payrolls and analyses the effect of the economic burden shift that can result from a shift in unemployment.