Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The portion of the Federal Insurance Contributions Act (FICA) tax paid by employers is 7.65 percent and the portion paid by employees is 7.65 percent

image text in transcribed
The portion of the Federal Insurance Contributions Act (FICA) tax paid by employers is 7.65 percent and the portion paid by employees is 7.65 percent (for a total of 15.3 percent). Suppose that absent FICA taxes, workers would have received a competitive equilibrium wage of $10.11 per hour. With FICA taxes divided equally between employers and employees, the actual market wage is $9.54 per hour. What is the incidence of the FICA tax? (Note: At the new market wage of $9.54 per hour, employers pay $0.73 in FICA taxes and workers pay $0.73 in FICA taxes for a total of $1.46.) As compared to the wage of $10.11 per hour that would have prevailed without FICA taxes, workers pay percent of the FICA tax and employers pay percent of this tax. (Enter your responses rounded to one decimal place.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso

7th Edition

978-0470477151, 978-0-470-5562, 470556242, 0-470-55624-2, 9780470556245, 978-0470507018

Students also viewed these Accounting questions