Who Bears the Burden of Payroll Taxes at the Top?
This paper estimates the incidence of a Norwegian payroll tax reform that introduced a five–percentage point surcharge on employer payroll taxes for earnings above a specified threshold.
We find no evidence that the surcharge was shifted onto high-income workers, despite these workers becoming more expensive to employ. Instead, firms that were more exposed to the surcharge—those employing a larger share of high-income earners—reduced their overall wage bill relative to less exposed firms following the reform. This reduction did notstem from lower wage growth in highly exposed firms. Rather, these firms adjusted primarily through changes in workforce composition, hiring fewer high-income employees and more low-income employees.
The paper is presented by the researcher Ragnhild Schreiner (UiO)