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by BTGmoderatorRO » Sat Feb 10, 2018 3:44 am
If the personal income tax rate is lowered from 40% to 33%, what is the differential savings for a tax payer having an annual income before tax to the tune of $45000?

A. $3500
B. $5000
C. $3150
D. $7000
E. $10000

AO is C
what is the best method to solve this? I need an Expert view.
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by GMATGuruNY » Sat Feb 10, 2018 4:06 am
Roland2rule wrote:If the personal income tax rate is lowered from 40% to 33%, what is the differential savings for a tax payer having an annual income before tax to the tune of $45000?

A. $3500
B. $5000
C. $3150
D. $7000
E. $10000
Since 40% - 33% = 7%, the taxpayer will save 7% of annual income:
(7/100)(45000) = 3150.

The correct answer is C.
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by Scott@TargetTestPrep » Thu Jun 06, 2019 4:57 pm
BTGmoderatorRO wrote:If the personal income tax rate is lowered from 40% to 33%, what is the differential savings for a tax payer having an annual income before tax to the tune of $45000?

A. $3500
B. $5000
C. $3150
D. $7000
E. $10000
The savings for a taxpayer is:

0.4(45,000) - 0.33(45,000)

45,000(0.4 - 0.33)

45,000(0.07) = 3,150

Answer: C

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