Currently, the social security payroll tax in the United States is evenly divided between employers and employees. Employers must pay the government a tax of 6.2 percent of the wages they pay, and employees must pay 6.2 percent of the wages they receive. Suppose the tax were changed so that employers paid the full 12.4 percent and employees paid nothing. Would employees be better off?

Payroll tax refers to the tax levied on the payroll of an employer. The employers withhold it by deducting a certain percentage of wages paid to employees. Employers then deposit this amount to the government as tax.

The government decides to charge 12.4 percent payroll tax from the employers instead of the half from the employers and half from the employees of the tax. The shift of tax on employers will not be beneficial for employees because the employers will reduce the wage rate of employees.

The employers will react to the government’s decision to shift the whole payroll tax on them by reducing the wage rate given to its employees. They will deduct the extra 6.2 percent from employees' wages to compensate for the extra tax burden. Hence, the employees will not be better-off.