Most of us are familiar with the “sticker shock” we experience on seeing a paycheck. Our pay stubs note the standard deductions for Medicare, Social Security, and federal income taxes. It is no secret that our labor is taxed.

But what many people don’t realize is that a large chunk of every worker’s salary is deducted before the paycheck is written—in the form of employer-paid payroll taxes. These “hidden” taxes often go unnoticed because they are not reported on the worker’s pay stub, but they nonetheless raise the worker’s overall market cost—that is, the amount the employer must pay to employ each worker.

Read the full Policy Note here