Answer
The statement, “A common complaint about income tax is ’One can’t afford to work more because it will put in a higher tax bracket.”” does not make sense.
Work Step by Step
Tax bracket defines payment of taxon the portion of income.For example, the lowest tax rate applicable is 10% to the first $8,700. The next portion of the income is taxed at 15% up to $35,350 and so on.
If taxable income is $8,700.
Calculate tax pay by multiplying 10% with taxable income:
\[\begin{align}
& \text{Tax}=10%\times \$8,700\\&=0.10\times\$8,700\\&=\$870\end{align}\]
If taxable income is $35,350,
Calculate tax pay by multiplying 10% with taxable income:
\[\begin{align}
& \text{Tax}=10\times \$8,700+15\times\left(\$35,350-\$8,700\right)\\&=0.10\times\$8,700+0.15\times\$26,650\\&=\$870+\$3,997.50\\&=\$4,867.50\end{align}\]
So, from above illustration, it can be seen that higher tax bracket does not mean losing money. Higher tax bracket does not change the tax rate applied to the lower tax bracket.
Hence, the statement,“A common complaint about income tax is ’One can’t afford to work more because it will put in a higher tax bracket.’” does not make sense.
