Question text Suppose the government imposes a tax of 20 percent on the first $40,000 of...

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Question text Suppose the government imposes a tax of 20 percent on the first $40,000 of...

Question text

Suppose the government imposes a tax of 20 percent on the first $40,000 of income and a tax of 30 percent on income above $40,000 but less than $90,000. Income over $90,000 is taxed at a rate of 40 percent. The tax liability for a person whose income is $50,000 is $15,000.

Select one:

True

False

business economics

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Answer 1

Answer #1

Tax on 50000 = 0.20 * 40000 + 0.30 * (50000 - 40000)

= 0.20 * 40000 + 0.30 * 10000

= 11000

So statement is False

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Answer 2

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