Question

Assume that Congress amends the tax law to provide for a maximum 20 percent rate on royalty income. Calculate the annual tax savings from this new preferential rate to each of the following taxpayers.
a. Ms. A, who is in a 39.6 percent marginal tax bracket and receives $8,000 royalty income each year.
b. Mr. B, who is in a 33 percent marginal tax bracket and receives $15,000 royalty income each year.
c. Mr. C, who is in a 10 percent marginal tax bracket and receives $3,000 royalty in-come each year.
d. Mrs. D, who is in a 28 percent marginal tax bracket and receives $70,000 royalty income each year.


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  • CreatedNovember 03, 2015
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