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Dr. Jones lives in a country with a progressive tax system. That is, he does not pay any taxes on the first $\$20{,}000$ in income he makes, he pays $5\%$ taxes on the next $\$25{,}000$, he pays $10\%$ taxes on the next $\$35{,}000$, he pays $15\%$ on the next $\$50{,}000$, and he pays $20\%$ on every additional dollar onwards. If Dr. Jones pays $\$10{,}000$ in taxes, then how much income does he make?

 Mar 9, 2018
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$10,000 - $1,250 - $3,500 - (0.15*M) =0

$5,250 - (0.15M) =0           add (0.15M) to both sides

$5,250 =0.15M                   divide both sides by 0.15

M =$5,250 / 0.15 = $35,000 - his last tax bracket. So, his total Income was:

$35,000 + $35,000 + $25,000 + $20,000(non-taxable amount)

=$115,000 - Dr. Jones Salary.

Ckeck:

$115,000 - $20,000 =$95,000 Taxable Income

On the first $25,000 he pays 5% tax =$1,250

On the next $35,000 he pays 10% tax =$3,500

$95,000 - $25,000 - $35,000 =$35,000 - his last tax bracket.

On this last $35,000 he pays 15% tax =$5,250

So, his total taxes =$1,250+$3,500+$5,250 =$10,000

 Mar 9, 2018

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