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- Title
THE INCIDENCE OF PAYROLL TAXES.
- Authors
Underhill, H. Fabian
- Abstract
This article discusses the influence of wage plans on entrepreneurial demand. Applying solely to unemployment compensation taxes under experience-rating, is the effect that stabilization by itself will have upon a firm's costs and therefore upon the incidence of the tax, since in the intermediate period some firms in an industry will have stabilized employment and others will not have done so. That is, some firms that regularize employment under the obvious incentive of a reduction in their payroll tax may find additional, unexpected savings in turnover costs or other expenses. This implies that such managements had not previously been completely rational in regard to their costs. Other concerns will, of course, find that whereas before the Social Security Act the savings from stabilization were more than offset by the costs involved in storage, diversification, etc., now the cost of stabilizing employment is less than the regular savings plus the reduction in tax. Still other firms will find that it is not yet worth while to regularize employment.
- Subjects
PAYROLL tax; BUSINESS tax; CORPORATE taxes; WAGES; INCOME; ENTREPRENEURSHIP
- Publication
Quarterly Journal of Economics, 1942, Vol 57, Issue 1, p160
- ISSN
0033-5533
- Publication type
Article
- DOI
10.2307/1881819