On a particular Saturday, Tom had planned to paint a room in his house, but his employer gave him the opportunity to work that day. If Tom works, he must hire a painter for $120. For Tom to have a positive cash flow from working and hiring the painter:
A)Tom must earn more than $160 if he is in the 25% marginal tax bracket.
B)Tom must earn at least $160 if he is in the 33% marginal tax bracket.
C)Tom must earn at least $150 if he is in the 25% marginal tax bracket.
D)Tom must earn at least $135 if he is in the 15% marginal tax bracket.
E)None of these.

Question

Quizplus · Accepted Answer

If Tom is in the 25% marginal tax bracket, he will pay $30 in taxes on the $120 he earns from working. This means that he must earn at least $160 to have a positive cash flow from working and hiring the painter.

On a Particular Saturday, Tom Had Planned to Paint a Room