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Q: What happens to the percentage of an income that is taxed when income rises and the tax is a proportional one? A. The percentage of tax falls. B. The percentage of tax rises. C. The
percentage rises and then falls. D. The percentage of tax stays the same.
A: In the given scenario, income and tax are proportional to each, therefore, if generated income rises that tax rises as well but therefore net income after tax decreases. For instance, Year 1 generated income is 10,000 and tax charges is 20%, and on year 2 generated income is 20,000 and tax charge is 40%. Income after tax for Year 1 is 8,000 and for year 12,000. Hence, proportional increases in
income and tax will cause the net income after tax to decrease.
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Asked 7/31/2012 8:36:27 PM
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