Consider the following tax system: Tax Brackets Marginal Tax Rates 1 0 – 50,000 10% 2 50,000 – 100,000 15% 3 100,000 – 150,000 18% 4 150,000 – 200,000 25% 5 200,000 – 250,000 30% 6 250,000 + 33% Assume that a business executive receives a gross monthly salary of $225,000.
Consider the following tax system: Tax Brackets Marginal Tax Rates 1 0 – 50,000 10% 2 50,000 – 100,000 15% 3 100,000 – 150,000 18% 4 150,000 – 200,000 25% 5 200,000 – 250,000 30% 6 250,000 + 33% Assume that a business executive receives a gross monthly salary of $225,000.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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- Consider the following tax system:
|
|
Tax Brackets |
Marginal Tax Rates |
|
1 |
0 – 50,000 |
10% |
|
2 |
50,000 – 100,000 |
15% |
|
3 |
100,000 – 150,000 |
18% |
|
4 |
150,000 – 200,000 |
25% |
|
5 |
200,000 – 250,000 |
30% |
|
6 |
250,000 + |
33% |
Assume that a business executive receives a gross monthly salary of $225,000.
i) Calculate the average and marginal tax rates that he/she has to pay.
ii) If the NIS, NHT and education tax amounts due at the end of November are $3,125.00, $5,600.08, and $5,040.35 respectively, what amount in net income (after-tax income) should the business executive expect to see on his pay stub.
iii) Advise the Minister on the potential benefit of eliminating progressive
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