Suppose the tax rate on the first $10,000 of income is zero;it is 10% on the next $20,000;20% on the next $20,000;30% on the next $20,000;and 40% 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 $7,500 for B.
C)$34,000 for A and $8,500 for B.
D)$22,000 for A and $6,600 for B.

Question

Quizplus · Accepted Answer

For Family A with $120,000 income: $0 for the first $10,000; 10% of $20,000 = $2,000; 20% of $20,000 = $4,000; 30% of $20,000 = $6,000; 40% of $50,000 ($120,000 - $70,000) = $20,000. Total tax = $2,000 + $4,000 + $6,000 + $20,000 = $32,000. For Family B with $55,000 income: $0 for the first $10,000; 10% of $20,000 = $2,000; 20% of $20,000 = $4,000; 30% of $5,000 ($55,000 - $50,000) = $1,500. Total tax = $2,000 + $4,000 + $1,500 = $7,500.

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