Payroll tax changes lead to increased labor earnings, study finds.
Payroll taxes in the United States can cause people to adjust their earnings to take advantage of tax breaks. By analyzing data from the Social Security Administration, researchers found that when payroll taxes were reduced in 2009, 2010, and 2011, there was a noticeable increase in people adjusting their earnings to fit within certain tax brackets. This suggests that people are responsive to changes in payroll taxes and may change their work behavior to maximize tax benefits.