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> thus shifting the cost from the state/government to the employer.

This would simply shift the cost from the state/government (read taxpayer) to end consumers (read taxpayer).

If the employer responds by increasing the prices of the goods/services they sell, then yes. However, in the market the consumers have a choice, so they can choose to not buy something, or buy somewhere else, and the market thus regulates itself. Don't want to pay taxes? Not much choice there. So I think having the market regulate itself is better than enforcing the cost of labor through taxes. (Who knows, maybe the employers would be forced to cut their margins even.)

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