Bunuel wrote:

A person who has an income of $10,000 pays what percent (to the nearest percent) of his or her income in taxes?

(A) 1

(B) 2

(C) 3

(D) 4

(E) 5

Whichever tax bracket you choose for the $10,000, the amount she pays is $220. That amount is 2.2 percent of her income. Answer B

She has to pay only once. (Otherwise, someone who makes $11,000 pays less than she. That defies the logic of the progressive tax bracket data.)

$10,000 happens to be the end and beginning of two brackets. It doesn't matter. Both brackets yield identical taxes owed.

1) Lower bracket (range) amount

In the $8,000-10000 bracket, a person who earns $10,000 pays:

a) a flat $140 plus

b) 4% of income over 8,000

(10,000-8,000) = $2,000 excess income

($2,000 * .04) = $80 excess tax

Flat $140 tax + $80 excess tax =

Total taxes paid: $220

2) Higher bracket tax amount

If (10,000 - 15,000), taxes paid:

a) a flat $220 plus

b) 5 percent of income > 10,000

There is no income over 10,000.

Total taxes paid: $220

$220 is what percent of her $10,000 income?

Percent of income:

\((\frac{220}{10000}

* 100)\) = (.022 * 100) =

2.2 percent, round down to 2%

Answer B

*

Here, a "bracket" specifies a range of income. If you fall in that range, you pay whatever amount the bracket says. Usually a bracket such as this one would say: "8000-9999, [pay $140 plus. . ."]

The next bracket would step up to "10000 - 12000, [pay $180 + . . ."] It doesn't matter here. The amounts are the same.
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