In one state, the income tax law provides for a tax of 1% on the first $1,000 of taxable income and 2% on the second $1,000 of taxable income. Mr.
Cable has a taxable income of $1,850. His income tax is:
The first $1,000 of taxable income is taxed at a rate of 1%, which equals $10. The remaining $850 of taxable income falls in the second tax bracket and is taxed at a rate of 2%, which equals $17. Therefore, Mr. Cable's income tax is $10 + $17 = $27.
To calculate Mr. Cable's income tax, we need to determine the tax owed for each tier of taxable income.
1. First, we calculate the tax owed on the first $1,000 of taxable income:
Tax on the first $1,000 = 1% of $1,000 = $10
2. Next, we calculate the tax owed on the remaining $850 of taxable income:
Tax on the second $1,000 = 2% of $850 = $17
3. Finally, we add the two tax amounts together to find the total income tax owed:
Total income tax = $10 + $17 = $27
Therefore, Mr. Cable's income tax is $27.