Kim is paid $50,000 per year, and pays an annual income tax of 10 percent. Due to an inflation rate of 10 percent, her pay increases to $55,000, which puts her in a higher tax bracket where she must pay 20 percent. Which of the following can be said of Kim?

Question

Quizplus · Accepted Answer

With the increase in pay due to inflation, Kim was pushed into a higher tax bracket where she had to pay 20 percent income tax instead of 10 percent. This means that inflation caused her to be taxed more heavily. As a result, her purchasing power decreased because she's paying a larger percentage of her income in taxes.

Kim Is Paid $50,000 Per Year, and Pays an Annual