Kathy works full time during the day as an economist and faces a 50 percent marginal tax rate. If Kathy were to get an offer to work a second job in the evenings doing consulting work for a local business for $10,000 per year, how much of this additional income would she be able to keep as net pay after taxes?
A) $1,000
B) $4,000
C) $5,000
D) $10,000

Question

Quizplus · Accepted Answer

Since Kathy faces a 50% marginal tax rate, she would be taxed 50% of any additional income she earns. Therefore, she would be able to keep 50% of the $10,000, which is $5,000.

Kathy Works Full Time During the Day as an Economist