Substituting information from the problem results in:
$55,250 = Pretax income - $10,725
Pretax income = $65,975
We can use the above formula to solve for the new tax rate.
After-tax income = Pretax income x (1 – tax rate)
$55,250 = $65,975 x (1 – tax rate)
Tax rate = $10,725/$65,975 = 16.26%
[LO5 RESEARCH] Locate the IRS Web site at
$100 the IRS collected, how much was spent on the IRS collection efforts?
What tax system
criterion does this information help you to evaluate with respect to the current U.S. tax
[LO4 RESEARCH] Using the Internet, find a comparison of income tax rates across states.
What state currently has the highest income tax rate?
In considering individual tax burdens
across states, what other taxes should you consider?