Corporation Growth has $76,500 in taxable income, and Corporation Income has $7,650,000 in taxable income.

a. What is the tax bill for each firm?

b. Suppose both firms have identified a new project that will increase taxable income by $10,000. How much in additional taxes will each firm pay? Why is this amount the same?

Table 2.3

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Taxable Income Tax Rate 50,000 75,000 100,000 335,000 15% 0- 50,001- 75,001- 100,001- 25 34 39 34 335,001- 10,000,000 10,000,001– 15,000,000 35 15,000,001- 18,333,333 38 18,333,334+ 35