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Suppose the Tax Rate on the First $10,000 of Income

Question 2

Multiple Choice

Suppose the tax rate on the first $10,000 of income is 0 percent; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $20,000; and 40 percent on income over $70,000. Family A has an income of $120,000 and Family B an income of $55,000. What is the tax bill of each?


A) $48,000 for A and $16,500 for B
B) $32,000 for A and $6600 for B
C) $32,000 for A and $7500 for B
D) $34,000 for A and $7500 for B

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