Question

suppose the personal income tax rate is changed to a flat rate of 16% of ones taxable income. if line 43 (taxable income is - and you are single at least but less than your tax is - 28,400 28,450 3,839 28,450 28,500 3,846 28,500 28,550 3,854 28,550 28,600 3,861 use the tax table that was used before this change to investigate the effect of the change in the rate on a single taxpayer with a taxable income of $28,439. under the existing rate, the taxpayer would pay $ . under the flat tax rate, the taxpayer would pay 16% of $28,439, or $ . that is an (select) of $ (select) decrease increase

Explanation:

Step1: Find tax under existing rate

Since $28400\leq28439 < 28450$, from the table, the tax under existing rate is $3839$.

Step2: Calculate tax under flat - rate

The flat - rate is 16% of the taxable income. So the tax under flat rate is $0.16\times28439 = 4550.24$.

Step3: Determine the change

To find the change, subtract the tax under existing rate from the tax under flat rate: $4550.24−3839 = 711.24$. Since the result is positive, it is an increase.

Answer:

Under the existing rate, the taxpayer would pay $\$3839$. Under the flat tax rate, the taxpayer would pay 16% of $\$28439$, or $\$4550.24$. That is an increase of $\$711.24$.