Who Pays the Tax?

Who bears the burden of a tax? Buyers or sellers? Why is it that the more elastic side of the market pays a smaller share of a tax? Again, we’ll apply what we know to the example of Social Security taxes and also look at the health insurance mandate as a part of the Affordable Care Act. Who pays for the mandate? The employers or the workers? We’ll also look at supply and demand of labor. Is the demand for labor more elastic than the supply?

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00:00 Who Pays the Tax?
00:28 The Economic Incidence
00:53 The Burden of a Tax – Inelastic Supply
02:35 The Burden of a Tax – Elastic Supply
03:17 Elasticity = Escape!
05:21 Example – Social Security Taxes
07:43 Example – Health Insurance Mandates

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