Question

Although Lawmakers legislative a 55 division of the payment of the FICA tax

Answer 1

There are two possible outcomes of this statement which are stated as below:-

First:-

Although lawmakers legislated a fifty-fifty division in the payment of the FICA tax

Correct Answer- The burden of a tax is dictated by the relative elasticity of supply and demand rather than the legislated tax incidence

Reason:- The tax incidence depends on the relative price elasticity of supply and demand. When supply is more elastic than demand, buyers bear most of the tax burden. When demand is more elastic than supply, producers bear most of the cost of the tax

Second:-

Question:- Although lawmakers legislated a fifty-fifty division in the payment of the FICA tax

Correct Answer:- the actual tax incidence is UNAFFECTED by the legislative tax income

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