Reference no: EM131092353
Income taxes Hubert, a resident of Econoland, currently works 20 hours a week and earns an annual income of $50,000. The following table shows income tax rates in Econoland. Annual Income Tax Rate Up to $50,000 10% From $50,000 to $75,000 20% Over $75,000 30%
This is an example of progressive, regressive, or proportional income tax. After paying income taxes, Hubert receives $35,000, $40,000,or $45,000 per year. If Hubert works an additional 10 hours a week (30 hours a week total), his annual income will be $75,000. After paying income taxes, Hubert will receive $62,000,$65,000,or $67,000 per year. In other words, by working an additional 10 hours per week, Hubert will receive an additional $17,000,$20.000, or $22,000 . If Hubert works 10 more hours in a week (40 hours a week total), his annual income will further increase to $100,000. After paying income taxes, Hubert will receive $82,000,$85,000,or $87,000 per year. In other words, by working 10 more hours per week, Hubert will receive $17,000, $20,000,or $22,000 more than what he would receive if he works only 30 hours a week. As Hubert works more, the additional amount he receives from working 10 more hours does not change, decrease, or increase , which means his cost of leisure .does not change, decrees or increase
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