Suppose the tax rate on the first $20,000 of income is 0%;10% on the next $20,000 earned;and 20% on any additional income earned.A person earning $35,000 pays an income tax of:

Question

Quizplus · Accepted Answer

The person's income can be divided into three parts: 
1) The first $20,000 has a tax rate of 0%, so no tax is paid on this portion. 
2) The next $15,000 (total income - $20,000) has a tax rate of 10%, so the tax on this portion will be 0.10 x $15,000 = $1,500. 
3) There is no additional income earned, so the person does not pay the 20% tax rate. 
Adding the taxes together, the total income tax paid is $1,500. Therefore, the best choice is B).

Suppose the Tax Rate on the First $20,000 of Income