Where do i put the tax on? the supply or demand?

Question

Given -

Demand: Wd = 30 - 0.04L

Supply: Ws = 0.05L - 15

Question -

Supposed the government imposes a payroll tax $9 per labor unit on the employer. Calculate the new equilibrium wage and employment level.

Answer 1

♦ Current equilibrium:

30-0.04L=0.05L-15

0.09L=45

L=500

W=10

♦ New equilibrium:

Wd-9=30-0.04L

Wd=30+9-0.04L=39-0.04L

39-0.04L=0.05L-15

0.09L=54

L=54*100/9=600

W=39-0.04*600=15

♦ Answ: New equilibrium L=600 and W=15

Answer 2

Since it is a tax on the employer, add the tax to the demand.  The employer is the demand for labor.

If the tax was levied onto the employees, then you would add it to the supply since employees are the supply of labor.