Question

Ethan is a nurse and earns $48,000 per year. ethan lives in california and pays about 6 percent of his income in state income taxes. the sales tax rate in his community is 8 percent. diamond is an accountant and earns $50,000 per year. diamond lives in arizona and pays about 3 percent of her income in state income taxes. the sales tax rate in her community is 9.5 percent. who will pay more in state income taxes? both ethan and diamond decide to buy a new computer at a store near their homes. the computer costs $500. who will end up paying more?

Answer 1

Ethan will pay more in state income taxes as his tax rate is higher than Diamond's. However, Diamond will end up paying more for the computer because the sales tax rate in her community is higher.

Step-by-step explanation:

To determine who will pay more in state income taxes, we need to calculate the taxes for both Ethan and Diamond based on their respective incomes and state tax rates. For Ethan, earning $48,000 a year with a 6% state tax rate, the state income tax would be:

State income tax for Ethan = 0.06 x $48,000 = $2,880.

For Diamond, earning $50,000 a year with a 3% state tax rate, the state income tax would be:

State income tax for Diamond = 0.03 x $50,000 = $1,500.

Therefore, Ethan will pay more in state income taxes compared to Diamond.

Next, we consider the purchase of a $500 computer by both Ethan and Diamond in their respective states. To calculate the total cost including sales tax, we use their local sales tax rates:

Total cost for Ethan (8% sales tax) = $500 + (0.08 x $500) = $500 + $40 = $540.

Total cost for Diamond (9.5% sales tax) = $500 + (0.095 x $500) = $500 + $47.50 = $547.50.

Hence, Diamond will end up paying more for the computer due to the higher sales tax rate in her community.