"In 2004, economist Stephen Entin wrote, "The economic burden of a tax frequently does not rest with the person or business who has the statutory liability for paying the tax to the government." That's because taxes are paid only by flesh-and-blood individuals. The actual incidence of any tax is not determined by the formalities of the tax code but, rather, by the realities of markets—specifically, by how sensitive buyers are to price changes, relative to sellers. It makes it difficult to fully predict the full impact of taxes, but as a general rule, it is rarely what politicians think.
Take, for example, the employer's statutorily stipulated share of the payroll tax. On paper, workers and employers each pay 7.65 percent of the employee's salary and wages. Employers send their portion of the tax as well as the one collected from their employees to the government. But this fact doesn't tell us anything about the tax's true burden. Economic research shows that employers shift the burden of the payroll to their employees by decreasing workers' wages by almost 7.65 percent."