The table below describes how income taxes are determined for a single person. Based on the formula in the third column, determine the income tax for an individual who is considering the impact of getting a raise in salary. We want to describe what will happen to their income tax if they get a raise from $40,000 to $41,000.

• What will be their income tax (tax owed) if they are earning $40,000.
• What will be their income tax (tax owed) if they are earning $41,000.
• What will be the percentage paid in income tax (tax owed divided by $40,000) if they earn $40,000?
• What will be the percentage paid in income tax (tax owed divided by $41,000) if they earn $41,000?
• How significant is the tax impact of the $1,000 income increase?

Marginal Tax rateEarnings/IncomeTax owed10%$0 to $9,87510% of income12%$9,876 to $40,125$988 plus 12% of the amount over $9,87622%$40,126 to $85,525$4,618 plus 22% of the amount over $40,12624%$85,526 to $163,300$14,606 plus 24% of the amount over $85,52632%$163,301 to $207,350$33,272 plus 32% of the amount over $163,30135%$207,351 to $518,400$47,368 plus 35% of the amount over $207,35137%$518,401 or more$156,235 plus 37% of the amount over $518,401

Part 2:

Should the U.S. change the percentages, dollar amounts, or the number of rows/brackets in the above table? Explain your position. If you aren't comfortable answering this do Google search on "proposed marginal tax rate changes" to learn about different points of view. Hopefully, you'll find contrasting points of view to learn from.