How would the calculation in exercise 3.13 differ for a worker who earns $500,000 and lives in
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How would the calculation in exercise 3.13 differ for a worker who earns $500,000 and lives in Vermont? This worker faces a state income tax rate of 9.5 percent and a federal income tax rate of 35 percent.
Exercise 3.13
Suppose that your employer offered you $4,000 in cash instead of health insurance coverage. Health insurance is excluded from state income taxes and federal income taxes. (To keep the problem simple, we will ignore Social Security and Medicare taxes.) The cash would be subject to state income taxes (8%) and federal income taxes (28%). How much would your after-tax income go up if you took the cash rather than the insurance?
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To calculate the aftertax income for a worker who earns 500000 and lives in Vermontwe would first ne...View the full answer
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