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Mr. Job income is $3,690.00. He is entitled to 2/9 of this amount free of tax and a further tax free allowance of $770,000. on his remaining income after this deduction, he pays 10 cent in the dollar on the first $600,000, 40cent in the dollar on the next $450,000, 60cent in the dollar on the next $450,000 and 70cent in the dollar of the remaining balance if any. How many income tax does he pay.

Mr. Job income is $3,690.00. He is entitled to 2/9 of this amount free of tax and-example-1
User Aminata
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1 Answer

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From the statement of the problem, we know that:

1) Mr Job income is $3,690,000.

2) He is entitled to 2/9 of this amount free of tax and a further tax-free allowance of $770,000. So, only:

X = (1 - 2/9) * $3,690,000 - $770,000 = $2,870,000.00 - $770,000 = $2,100,000.

from his salary will pay taxes.

3) He pays 10 cents in the dollar on the first $600,000. So he pays:

T1 = 0.1 * $600,000 = $60,000

for the first $600,000.

After this, the money left to deduct taxes is:

X1 = X - $600,000 = $2,100,000 - $600,000 = $1,500,000.

4) He pays 40 cents in the dollar on the next $450,000. So he pays:

T2 = 0.4 * $450,000 = $180,000

for the next $450,000.

After this, the money left to deduct taxes is:

X2 = X1 - $450,000 = $1,500,000 - $450,000 = $1,050,000.

5) He pays 60 cents in the dollar on the next $450,000. So he pays:

T3 = 0.6 * $450,000 = $270,000

for the next $450,000.

After this, the remaning balance is:

X3 = X2 - $450,000 = $1,050,000 - $450,000 = $600,000.

6) He pays 70 cents in the dollar on the remaining balance. The remaining balance is X3 = $600,000.

So he pays:

T4 = 0.7 * $600,000 = $420,000

for the reamaining balance.

The total income tax is the sum of each of the partial taxes:

T = T1 + T2 + T3 + T4 = $60,000 + $180,000 + $270,000 + $420,000 = $930,000.

Answer

The total income tax that Mr Job pays is $930,000.

User Sagar Chorage
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