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A state legislator drafts an income tax proposal that imposes a tax of \(20\%\) on the first \(\$100,000\) of an individ

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by Gmat_mission » Sun Dec 19, 2021 1:21 am

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A state legislator drafts an income tax proposal that imposes a tax of \(20\%\) on the first \(\$100,000\) of an individual’s income, increases the tax to \(25\%\) on the next \(\$50,000\) in income and increases the tax by an additional \(5\%\) on each additional \(\$50,000\) in income, to a maximum tax of \(40\%\) on the portion of income over \(\$250,000.\) Under the proposal, would the state collect an average (arithmetic mean) of more than \(30\%\) of the income of the residents of County \(X?\)

(1) The median income for a resident of County \(X\) is \(\$65,000.\)
(2) No resident of County \(X\) earns an income of more than \(\$350,000.\)

Answer: B

Source: Princeton Review
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