Mr. N and Mr. R are employed by HD Inc., which provides its employees with free parking. If the parking were not available, Mr. N would pay $35 a month to a city garage. Mr. R uses public transportation to commute. HD offers a complete family medical plan to its employees in which both Mr. N and Mr. R participate. Mr. N’s family consists of five people, while Mr. R is single. Consequently, Mr. N’s annual cost of comparable medical insurance would be $9,000, while Mr. R’s cost would be just $4,100.
a. Mr. N has a 28 percent marginal tax rate. How much additional salary would he have to earn to provide himself with parking and medical insurance?
b. Mr. R has a 39.6 percent marginal tax rate. How much additional salary would he have to earn to provide himself with parking and medical insurance?