To determine which statement about Geoffrey's tax bill is correct, let's break down the calculations for both tax plans and compare them.
### Plan A Tax Calculation:
Plan A taxes Geoffrey's income in three brackets:
1. The first [tex]$10,000 at 5%
2. The next $[/tex]85,000 (from [tex]$10,000 to $[/tex]95,000) at 10%
3. Any amount above [tex]$95,000 at 15%
Geoffrey's income is $[/tex]98,000. Here's how it breaks down:
1. First [tex]$10,000: Taxed at 5%
\[
10,000 \times 0.05 = 500
\]
2. Next $[/tex]85,000: (from [tex]$10,000 to $[/tex]95,000) Taxed at 10%
[tex]\[
85,000 \times 0.10 = 8,500
\][/tex]
3. Amount above [tex]$95,000: ($[/tex]98,000 - [tex]$95,000 = $[/tex]3,000) Taxed at 15%
[tex]\[
3,000 \times 0.15 = 450
\][/tex]
Total tax under Plan A:
[tex]\[
500 + 8,500 + 450 = 9,450
\][/tex]
### Plan B Tax Calculation:
Plan B taxes all of Geoffrey's income at a flat rate of 10%. Therefore, the tax is:
[tex]\[
98,000 \times 0.10 = 9,800
\][/tex]
### Tax Difference Calculation:
Now, we'll find the difference between the taxes in Plan B and Plan A:
[tex]\[
9,800 - 9,450 = 350
\][/tex]
### Conclusion:
Geoffrey would pay approximately \[tex]$350 more under Plan B.
Hence, the correct statement is:
- He would pay approximately \$[/tex]350 more under plan B.
