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16 Sep 2014, 01:05
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A monthly income up to $5,000 is taxed at 30%, while any income in excess of $5,000 is taxed at 40%. If Tom paid $1,260 in taxes in September and $2,860 in taxes in October, what was the percentage increase in Tom's pre-tax earnings from September to October?
A. 40%
B. 50%
C. 75%
D. 80%
E. 100%
A. 40%
B. 50%
C. 75%
D. 80%
E. 100%
16 Sep 2014, 01:05
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Official Solution:
A monthly income up to $5,000 is taxed at 30%, while any income in excess of $5,000 is taxed at 40%. If Tom paid $1,260 in taxes in September and $2,860 in taxes in October, what was the percentage increase in Tom's pre-tax earnings from September to October?
A. 40%
B. 50%
C. 75%
D. 80%
E. 100%
In September, Tom paid $1,260 in taxes. Given that this amount is less than $1,500 (which is 30% of $5,000), we can deduce that he earned less than $5,000 that month. By using the 30% tax rate, it can be calculated that Tom earned $1,260 ÷ 30% = $4,200 in September.
In October, Tom's tax payment was $2,860. Out of this, $1,500 accounts for the tax on the first $5,000 he earned. The remaining tax amount, $2,860 - $1,500 = $1,360, corresponds to his earnings over $5,000. Considering the 40% tax rate for earnings above $5,000, we can infer that Tom earned an additional $1,360 ÷ 40% = $3,400 in October. Therefore, his total earnings for October amounted to $5,000 + $3,400 = $8,400.
Comparing the two months, Tom's earnings in October were twice that of September, indicating a 100% increase in his pre-tax earnings from September to October.
Answer: E
A monthly income up to $5,000 is taxed at 30%, while any income in excess of $5,000 is taxed at 40%. If Tom paid $1,260 in taxes in September and $2,860 in taxes in October, what was the percentage increase in Tom's pre-tax earnings from September to October?
A. 40%
B. 50%
C. 75%
D. 80%
E. 100%
In September, Tom paid $1,260 in taxes. Given that this amount is less than $1,500 (which is 30% of $5,000), we can deduce that he earned less than $5,000 that month. By using the 30% tax rate, it can be calculated that Tom earned $1,260 ÷ 30% = $4,200 in September.
In October, Tom's tax payment was $2,860. Out of this, $1,500 accounts for the tax on the first $5,000 he earned. The remaining tax amount, $2,860 - $1,500 = $1,360, corresponds to his earnings over $5,000. Considering the 40% tax rate for earnings above $5,000, we can infer that Tom earned an additional $1,360 ÷ 40% = $3,400 in October. Therefore, his total earnings for October amounted to $5,000 + $3,400 = $8,400.
Comparing the two months, Tom's earnings in October were twice that of September, indicating a 100% increase in his pre-tax earnings from September to October.
Answer: E
20 Oct 2023, 11:24
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I have edited the question and the solution by adding more details to enhance its clarity. I hope it is now easier to understand.
