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QWERTY Co. decides to give a 6% raise to its employee Jean, who is currently in the 40% tax bracket. The company is in the
QWERTY Co. decides to give a 6% raise to its employee Jean, who is currently in the 40% tax bracket. The company is in the 27% tax bracket. What is the after-tax implication for each of the parties in this transaction? Both Jean and the company have a 3% after-tax cost/benefit. We should only consider the pre-tax amount of 6% to each party. Both the company and Jean have an after-tax cost of 4.38%. The company has a net after-tax cost of 4.38% and Jean has an after-tax income of 3.6%.
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