_____ 6.A rational taxpayer in the 25% tax bracket who wants health insurance would prefer the employer pay the $5,000 premium for this health insurance rather than receive a $5,000 increase in salary to purchase health insurance on his own.

Question

Quizplus · Accepted Answer

This is because if the employer pays the premium for health insurance, it is not subject to income tax, while if the employee receives a salary increase to purchase health insurance on their own, it would be subject to income tax at the 25% tax bracket. Therefore, the taxpayer would prefer the tax-free benefit of having their employer pay the premium.

_____ 6A Rational Taxpayer in the 25% Tax Bracket Who Wants