Indy currently earns $50,000 in taxable income and pays $8,000 in taxes. Suppose that Indy faces a marginal tax rate of 20 percent and his boss offers him a raise of $3,000 per year. Indy should
A) accept the raise because his after-tax income will rise by $2,400.
B) accept the raise because his after-tax income will rise by $400.
C) reject the raise because his after-tax income will fall by $2,000.
D) reject the raise because his after-tax income will fall by $1,500.
Correct Answer:
Verified
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