Question

A country is considering two income tax rates. Geoffrey is comparing what his tax bill would be under each plan. Under plan A, he pays 5% on the first $10,000. The next $85,000 is taxed at a rate of 10%. Any money earned above $95,000 is taxed at 15%. He made $98,000 last year. Which statement below is correct?
   Plan A Tax Rates                                 
x  $10,0005%$10,000  x  $95,00010%x > $95,00015%
Plan B Tax Rates

All levels of income

10%

CHOICES:
He would pay approximately $350 more under plan B.He would pay approximately $1,925 more under plan B.He would pay approximately $5,700 more under plan A.He would pay approximately $4,900 more under plan A.

Answer 1

The total tax rate for each plan is computed below:
Plan A= [5%(10000)]+[10%(85000)]+[(15%(3000)]
Plan A= $9450
For Plan B, tax is computed at 10% across all earnings
Plan B= 10%x(98000)
Plan B= $9800
Difference = Plan B-Plan A=($9800-$9450)
                   = $350
From the computed tax rate in each plan. Plan B will pay $350 more than Plan A.

Answer 2

Answer:

A

Step-by-step explanation: