Understanding employer and worker paid taxes
Hi,
I'm finishing up a large analysis of a production function shift in the construction industry and have one outstanding/hanging issue...tax payments by workers and employers.
First the setup...I am modeling a change in worker wage incomes resulting from a hypothetical productions function shift that redistributes spending on major inputs based on the characteristics of two different groups of states depending on whether they have prevailing wage regulations at the state state level. Rather than changing overall spending within the industry, I am modeling a net-zero change in the spending pattern
My problem is that because the shift happens both between categories (i.e. spending on wages decreases while spending on materials increases) and within categories (the overall wage distribution shifts to the left) I am unable to simply use an employment compensation impact to model the income change solely within the industry in a way that accounts for worker paid taxes and FICA. I've managed to use the Employee Compensation breakdown in the IxI Social Accounting Matrix to calculate the employer paid taxes, however I can't quite figure out how to get to the employee side.
Help would be appreciated!
-
Thank you for your post. Could you provide us a little bit more information about what you are trying to do? As you may have been able to see there is no way to adjust the tax rates in the SAM. When modeling with a Labor Income Change, the Model removes payroll taxes, income taxes and savings from each Household according to its appropriate SAM rates. Since taxes are not re-spent in the Model (i.e. the tax rate is counted towards the Total Value Added but is not included in any rounds of the effects) there is no way to adjust this value relative to the Events. Are you trying to change the total value of income expenditures towards purchases? Are you trying to change the value of taxes going to governments? Are you trying to change the ratios of Value Added elements? We apologize to ask questions in return, but we want to be sure that we provide an answer that will address your specific needs and concerns.
Please sign in to leave a comment.
Comments
1 comment