Question

If David and Louisa are in the same tax jurisdiction that utilizes a proportional tax structure and David pays $1,200 tax on $20,000 worth of income, how much tax will Louisa pay on $25,000?

1) $500
2) $1,500
3) $25,000
4) $0
5) $1,840

Answer 1

In a proportional tax structure, Louisa will pay $1,500 in taxes on a $25,000 income, which is calculated by applying the tax rate of 6% found from David's tax payment.

Step-by-step explanation:

The student is working on a mathematics problem related to proportional tax structure. A proportional tax structure is one in which the tax rate remains constant regardless of the income level. For example, if David pays $1,200 in tax on $20,000 of income, this represents an average tax rate of 6% because $1,200 is 6% of $20,000. To find out how much tax Louisa will pay on $25,000, we simply calculate 6% of $25,000, since the proportional tax rate remains the same across all income levels.

To calculate the tax Louisa would pay:

• Find the tax rate by dividing David's tax ($1,200) by his income ($20,000): $1,200 / $20,000 = 0.06, or 6%.
• Apply that tax rate to Louisa's income: 0.06 x $25,000 = $1,500.

Therefore, Louisa will pay $1,500 in taxes on her $25,000 income.