Asked by
Maria Mancebo
on Dec 11, 2024
Verified
Emma works full time during the day as an economist and faces a 90 percent marginal tax rate. If Emma 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) $6,000
D) $10,000
Marginal Tax Rate
The rate at which the last dollar of income is taxed, reflecting the rate applied to each additional dollar of income.
Net Pay
The amount of money an employee receives after deductions like taxes and social security charges are subtracted from the gross pay.
- Compute and differentiate between the mean tax rate and the incremental tax rate.
- Examine the impact of income variations on tax obligations and tax percentages.
Verified Answer
HB
Learning Objectives
- Compute and differentiate between the mean tax rate and the incremental tax rate.
- Examine the impact of income variations on tax obligations and tax percentages.