Assume that a person earns $600 per day at a certain job. If the marginal tax rate is cut from 40% to 30%, then this person's after-tax daily earnings will:
A) Decrease from $240 to $180
B) Increase from $480 to $540
C) Decrease from $540 to $480
D) Increase from $360 to $420

Question

Quizplus · Accepted Answer

If the person earns $600 per day at the job and the marginal tax rate is cut from 40% to 30%, then their after-tax daily earnings will increase.

Before the tax cut: 
$600 * 0.4 = $240 (tax)
$600 - $240 = $360 (after-tax)

After the tax cut: 
$600 * 0.3 = $180 (tax)
$600 - $180 = $420 (after-tax)

Therefore, the after-tax daily earnings will increase from $360 to $420, which is represented by option D.

Assume That a Person Earns $600 Per Day at a Certain