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How do the payroll taxes levied on the earnings of workers affect their decisions about how much leisure they consume?

When the government taxes younger people to pay benefits to older people, how does this affect the amount of assistance that younger people might voluntarily choose to offer older people?

When the government taxes younger people to pay benefits to older people, how does this affect the size of the bequests that older people are likely to leave to their children or grand children when they die?

In general, people who hare more productive earn higher incomes and thus pay higher taxes. How would a change in the immigration laws that favored more highly educated and skilled individuals affect the future tax burden of today's American college students? Would the admission of better-educated immigrants tend to raise or lower the wages of American college graduates? On balance, would an overhaul of the immigration system benefit or harm today's college students?

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Solution Preview

Please help with the following:

How do the payroll taxes levied on the earnings of workers affect their decisions about how much leisure they consume?

Hike in payroll taxes will increase the burden on the workers. Their disposable earnings will go down and hence they will have less money for leisure.

When the government taxes younger people to pay benefits to older people, how does this affect the amount of assistance that younger people might voluntarily choose to offer older people?
When the ...

Solution Summary

Effects are noted of payroll taxes.

$2.19
Similar Posting

Payroll Tax Entries

I need to double check my answers with a professional. Thank you. Please see attached.
Allison Hardware Company's payroll for November 2010 is summarized below.

Amount Subject to Payroll Taxes
Unemployment Tax
Payroll Wages Due F.I.C.A Federal State
Factory $140,000 $140,000 $40,000 $40,000
Sales 32,000 32,000 4,000 4,000
Administrative 36,000 36,000 ----- -----
Total $208,000 $208,000 $44,000 $44,000

At this point in the year some emplyees have already received wages in excess of those to which payroll
taxes apply. Assume that the state unemployment tax is 2.5%. The F.I.C.A. rate is 7.65% on an employee's
wages to $102,000 and 1.45% in excess of $102,000. Of the $208,000 wages subject to F.I.C.A. tax, $20,000
of the sales wages is in excess of $102,000. Federal unemployment tax rate is 0.8% after credits. Income
tax withheld amounts to $16,000 for factory, $7,000 for sales, and $6,000 for administrative.

Instructions

a. Prepare a schedule showing the employer's total cost of wages for November by function.
b. Prepare the journal entries to record the factory, sales, and administrative payrolls including the employer's payroll taxes.

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