Teaching Note: Let's Stop Professing That the Legal Incidence of the Social Security Tax Is Irrelevant

James McClure and Norman Van Cott
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Norman Van Cott: Ball State University

Eastern Economic Journal, 2000, vol. 26, issue 4, 483-486

Abstract: The U.S. Social Security levy is widely used by economists to illustrate the irrelevance of legal tax incidence for economic incidence. However, the levy's magnitude in conjunction with an asymmetry in the U.S. federal income tax code make the levy's legal incidence highly relevant for its economic incidence. The legal incidence of the social security levy is irrelevant only to workers who are disinterested in large variations in take-home pay.

Keywords: Incidence; Income Tax; Social Security; Tax Incidence; Tax (search for similar items in EconPapers)
JEL-codes: H22 H24 H55 (search for similar items in EconPapers)
Date: 2000
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