pushpitkc wrote:

Earlier, the tax laws of a country required one of pay flat 20% of one's income. Recently, the concept of progressive tax was implemented and one now needs to pay 30% income tax on the part of one's income above $40000. Jack paid the same amount of tax this year although he earned $10000 more than he did the previous year. What was Jack's income this year?

A. $70000

B. $80000

C. $90000

D. $100000

E. $120000

Source:

Experts GlobalLast year Jack paid taxes at a flat rate of 20 percent of income.

This year he paid exactly the same dollar amount in taxes, at a rate of 30 percent for income greater than $40,000, AND he earned $10,000 more this year.

Let x = this year's income

Last year's taxable income = (x-10,000)

This year's taxable income = (x-40,000)

\(.20(x - 10,000) = .30(x - 40,000)\)

\(.20x - 2,000 = .30x - 12,000\)

\(.10x = 10,000\)

\(x = $100,000\)Check:

Last year, on $90,000, Jack paid (.20)($90,000) = $18,000

This year, on $100,000, he paid (.30)($60,000) = $18,000. That's a match.

He earned $100,000 this year.

Answer D

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