Sam has taxable income of $350,000 dollars. Sam's nephew Adam has taxable income of $3,500. What federal income tax rate applies to the first taxable dollar of Sam's taxable income and what tax rate applies to the first taxable dollar of Adam's taxable income? a. 0% and 0%. b. 0% and 10%. c. 10% and 10%. d. 10% and 39.6%.

Question

Jr

Business

16 September, 12:52

Sam has taxable income of $350,000 dollars. Sam's nephew Adam has taxable income of $3,500. What federal income tax rate applies to the first taxable dollar of Sam's taxable income and what tax rate applies to the first taxable dollar of Adam's taxable income? a. 0% and 0%. b. 0% and 10%. c. 10% and 10%. d. 10% and 39.6%.

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Fatima Garner · Answer 1

c. 10% and 10%

Explanation:

The income tax rate are progressive, this means the rates applies for the amount above the top of the previous bracket

Sam will be taxes with a higher rate in the subsequent dollars and end up with the 39.6% tax for their last part of income

But, as state beore the tax is progressive not all gains are taxes wit hthe same tax-rate

Also is important to notice this makes both making equal contribution when they are equal (below a certain threshold) and then, being treated unequally when their income are different