In January 1914, Henry Ford startled the world by announcing that Ford Motor Company would pay $5 a day to its workers. At the time, $5 was about double what the average auto worker made. A recent article stated that at General Motors, the total cost for wages (not including benefits) is about $35 an hour. 1) What was the income tax rate in 1914 for someone making $5 a day? 2) What was the income tax rate in 2018 for someone making $35 an hour? 3) What has the average annual inflation been since 1914? 4) What would $5 per day be in 2018 dollars? 5) If you consider take home pay, who received the most take home pay in inflation adjusted 2018 dollars, the $5 per day worker in 1914 or the $35 per hour worker today? 6) Which worker would have a better chance of creating personal wealth?
1)
Income tax rates in 1914 (Single individuals)
Income | Rate |
0+ | 1% |
20,000+ | 2% |
50,000+ | 3% |
75,000+ | 4% |
100,000+ | 5% |
250,000+ | 6% |
500,000+ | 7% |
Annual income = 5 per day x 5 days a week x 52 weeks = 1300
1% income tax rate, so income tax amount is $13
2)
Income tax rates in 2018 (Single individuals)
Income | Rate |
0 - 9,524 | 10% |
9,525 - 38,699 | 12% |
38,700 - 82,499 | 22% |
82,500 - 157,499 | 24% |
157,500 - 199,999 | 32% |
200,000 - 499,999 | 35% |
500,000 + | 37% |
Income = 35 per hour x 8 hrs a day x 5 days a week x 52 weeks
= $72,800
This income is taxed using slab rates of 10%, 12%, 22%
3)
Average annual inflation in 1914 = 1%
Average annual inflation in 2018 = 2.4%
Average CPI in 1914 = 10
Average CPI in 2018 = 251.1
4)
A $5 per day in 1914 in 2018 terms will be $5 x (251.1/10)
= $125.55 per day
5)
Take home pay will be higher in 2018 $35 per hour worker as he is earning $280 a day ($35x8) and even after the marginal income tax rate 22% applicable for his income (from part 2), his income is higher than $125.55
6)
Worker in 2018 having better chance of creating Personal wealth
In January 1914, Henry Ford startled the world by announcing that Ford Motor Company would pay...
4. A certain circuit is properly fused for a 5-horsepower motor. If the motor is to be replaced by several X-horsepower motors, how many motors will the fuses be able to carry? 5. A 20-foot length of underground cable is cut into 6-inch pieces. How 6. How many whole wedges 3% inches long can be made from 20 wedge Both work 5 days per week. Over a 2-week period, how many times longer than electrician A does electrician B work,...
You recently switched jobs and your new job is going to pay you $86,000 per year. You expect to earn a 5% bonus in addition to your salary. Your new company offers a 401k plan and you plan to contribute 10% to your 401k. You are preparing your spending plan for the year and need to answer the following questions in order to complete your plan. Use the tax tables below to help answer the questions. a. What is your...
Remember the Hawthorne Studies from Business & Society, Principles of Management, and/or Organizational Behavior? Even back in the early 1930 workers to the point where management knew how many telephone relays per hour, per minute. You have read about utilitarian theory. You have studied how managers have every right to optimize production. Hopefully, in a college of business, you are learning those tools every day-that is why you are studying business... Businesses own the machinery, the method, the material, and...
Question: If you choose to invest, what percentage of your pay would you defer to the Section 401(k)? Why? Case: After nearly three months at your new job, you believe that you have a good understanding of your responsibilities, as well as the benefits of working at your company. However, you just received a letter from HR informing you of the opportunity to participate in the company’s retirement plan. Under company policy, you can begin participating in the retirement plan...
The Certainty Company (CC) operates in a world of certainty. It has just hired Matt (age 20) who will retire at age 65, draw retirement benefits for 15 years, and die at age 80. Matt's salary is $20,000 per year, but wages are expected to increase at the 5% annual rate of inflation. CC has a defined benefit plan in which workers receive 1% of the final year's wage for each year employed. The retirement benefit, once started, does not...
Layout References Mailings Review View Tell me Ο Α Α΄ Аа AO 21 x ADA ABCcDdEe AaBbCcDdEe 2 AaBbcc AaBbceDdE AaBb Aalbcode Heading 1 Heading 2 Normal Title No Spacing Subtitle Taxes In this day and age, misinformation is rampant on the internet and on social media. It is a vital skill to be able to think critically and problem solve to sort through important issues. We will explore two social media posts concerning the political realm that have been...
3. How long would it take for S&S Air to pay off the
smart loan assuming 30-year traditional mortgage
payments? Why is this shorter than the time
needed to pay off the traditional mortgage? How
much interest would the company save?
S&S Air’s Mortgage ark Sexton and Todd Story, the owners of S&S Air, Inc., greatest Interest savings. At Todd's prompting, she goes IV Iwere impressed by the work Chris had done on finan on to explain a bullet loan....
Required information Taylor's is a popular restaurant that offers customers a large dining room and comfortable bar area. Taylor Henry, the owner and manager of the restaurant, has seen the number of patrons increase steadily over the last two years and is considering whether and when she will have to expand its available capacity. The restaurant occupies a large home, and all the space in the building is now used for dining, the bar, and kitchen, but space is available...
Question 1 Adelaide produces "Final Exam Care Packages" for resale. She is currently working a total of five hours per day to produce 100 care packages. a) What is Adelaide's productivity? Adelaide thinks that by redesigning the package, she can increase her total productivity to 133 care packages per day. b) What will be her new productivity? c) What will be the percentage increase in productivity if Aditi makes the change? Question 2 Punjab Performance Auto, Inc., modifies 375 autos...
What is the operating cycle and cash cycle (in days) for Ford
Motor Company (F) in 2019 (round to two decimal places)?
A C D E F G H I J K L M 1 NAME: FORD MOTOR CO) TICKER SYMBOL: F 2 3 4 5 STATEMENT OF FINANCIAL POSITION l'iscal Year: 2015 2016 2017 (FYR Ending): (31 DEC2015) (31 DEC2016) (31DEC2017) 2018 2019 (31 DEC2019) 2015 2016 2017 (31 DEC2015) (3IDEC2016) (31DEC2016) (31 DEC2017) 2018 2019 (31 DEC2018) (31...