Suppose that your employer offered you $4000 in cash instead of health insurance coverage. Health insurance is excluded from state income taxes and federal income taxed. To keep the problem simple, we will ignore Social Security and Medicare taxes. The cash would be subject to state income taxes 8% and federal income taxes 28%. How much would your after-tax income go up if you took the cash rather than the insurance

How different would this calculation look for a worker who earned income tax rate of 9.5 percent and a federal income tax rate of 35 percent.

Answer rating: 100% (QA)

Cash4000 Federal tax28 state tax8 Total tax28836 ... View the full answer