Payroll taxes levied on employers have become an increasingly important part of the Swedish tax system. These taxes-including various collective fees agreed on in central wage negotiations-amounted to about 6% of the wage bill of private business in 1950, but had reached 40 % in the late 1970s. Payroll tax increases have been quite dramatic during the last decade, with tax rates climbing from 14 to 40%. Attempts to estimate the extent to which payroll tax increases have been directly shifted back onto labor as lower wages are reported in this paper. The basic message of the empirical analysis is that payroll tax increases have produced some backward shifting on wages, although the shifting appears to be far from complete. A onepercent statutory wage cost increase is associated with an actual wage cost increase of about one-half of a percent.