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

Question

Quizplus · Accepted Answer

The first $20,000 is not taxed, so the taxable income is $15,000. 
10% of $20,000 is $2,000, leaving $15,000. 
20% of $15,000 is $3,000. 
So the total tax paid is $2,000 + $3,000 = $5,000. However, since the person only earned $35,000, they don't have to pay tax on the last $15,000. 
Therefore, the tax actually paid is $2,000, which is answer B.

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