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?
$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
