Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The current tax rate paid on income by employees in a company is 30 percent. The employer provides workers with a health insurance policy that

The current tax rate paid on income by employees in a company is 30 percent. The employer provides workers with a health insurance policy that is worth $3,000 per year.

a. Assuming that the company has 1,000 workers, what is the indirect government subsidy for health insurance for workers in the company?

b. Suppose that instead of providing the workers with health insurance as a fringe benefit, the employer paid each worker an additional $3,000 that they could use to purchase health insurance. If a worker wanted to buy $3,000 worth of insurance under the new arrangement, would the worker be better or worse off? Why?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Environmental And Safety Auditing Program Strategies For Legal International And Financial Issues

Authors: Unhee Kim, John F. Falkenbury, Timothy A. Wilkins, Ralph Rhodes, Richard J. Satterfield

1st Edition

1566702461, 978-1566702461

More Books

Students also viewed these Accounting questions

Question

Controls for goods bieng purchased without invoice

Answered: 1 week ago

Question

b. Explain how you initially felt about the communication.

Answered: 1 week ago