Suppose the Income Tax Structure Is as Follows: the First

Essay

Suppose the income tax structure is as follows: the first $28,000 is taxed at 20%, the remainder is taxed at 30%. Compute the tax on an income of $40,000. Now suppose that inflation is 5% and you receive a cost of living (5%) raise to $42,000. Compute the tax on this income. To compare the taxes you should adjust the tax for inflation (add 5%).