Question
Lars Osberg, a single taxpayer with a 35 percent marginal tax rate, desires health insurance. The health insurance will cost Lars $8,500 to purchase if
Lars Osberg, a single taxpayer with a 35 percent marginal tax rate, desires health insurance. The health insurance will cost Lars $8,500 to purchase if he pays for it himself through the health exchange (Lars's AGI is too high to receive any tax deduction for the insurance as a medical expense). Answer the following questions about this benefit.(Do not round intermediate computations. Round your final answer to the nearest whole dollar amount.)
a.What is the maximum amount of before-tax salary Lars would give up to receive health insurance from Volvo?
b.What would be the after-tax cost to Volvo to provide Lars with health insurance if it could purchase the insurance through its group plan for $5,000?
c.Assume that Volvo could purchase the insurance for $5,000. Lars is interested in getting health insurance and he is willing to receive a lower salary in exchange for the health insurance. What is the least amount by which Volvo would be willing to reduce Lars's salary while agreeing to pay his health insurance?
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